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Preparation Seizes Opportunity – Higher Accruals Set the Pace.
Look ahead on convertible bonds to see what sets this asset class apart from traditional straight bonds.
From a fundamental perspective, we continue to keep a close eye on inflation, growth, China and refinancing risk of emerging markets.
We believe the ability for investors to earn attractive levels of income with less downside risk continues to be at their most attractive level in years.
Stable fundamentals and reasonable valuations suggest that U.S. high yield market is better positioned than most fixed income asset classes due to its higher spreads, bigger coupons and shorter maturities.
With interest rates likely remaining higher for longer and corporate earnings growth expected to further slow into the remainder of 2023, we expect returns to be driven by carry rather than by spread compression.
Over the first half of 2023, the US economy exhibited considerable resilience in the face of ongoing monetary tightening. Read more to learn why we believe the resilience story should not be overplayed.
We maintain that mortgage-backed securities (MBS) have become an attractive relative value alternative to investment grade (IG) credit in the face of increased economic uncertainty and the direction of Federal Reserve interest rate policy.