BI-WEEKLY COMMENTARY

A Note from the AB Fixed Income Trading Desk

Thoughts from our Senior Portfolio Managers


February 04, 2025

 
 

LATEST COMMENTARY

Broader Horizons for Better Opportunity

“Variety is the spice of life.”—William Cowper

Investors are now encountering increased divergence within the fixed-income landscape. Central bank activity, macroeconomic outlooks, and even political policy are all diverging. More divergence provides investors with a greater opportunity for to generate returns while also mitigating risk. Adopting a global, multi-sector perspective should enable investors to generate income more efficiently in the months ahead.  Discover how to position your portfolio for evolving market conditions. 

Discover how to position your portfolio for evolving market conditions.

 

Key Takeaways

  1. Central banks on different paths
    In the past two weeks, some major central banks have taken varied actions: Bank of Canada and European Central Bank have cut rates, the US Federal Reserve held steady, and the Bank of Japan raised policy rates. This divergence will likely lead to varying government yields.

  2. Different economic backdrops = different opportunities across sectors
    Growth is slowing faster in some regions than others. Divergence among fixed income sectors has increased, presenting opportunity to multi-sector investors.

  3. Tariffs and trade wars: uneven impact
    New tariff policy can be complicated, with select industries getting hit the hardest while others get preferential treatment. Cyclical and import-heavy businesses will face greater challenges from a more restrictive trade environment than defensive businesses that are not as reliant on cross-border trade.

 
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A Note from the Trading Desk

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Past Commentaries

 

A NOTE FROM THE TRADING DESK:
22 January 2025 / 5 min read

Since September, the Fed has lowered its policy rate by 100 basis points (bps), yet the yield on the 10-year Treasury has risen by roughly the same amount—a result that has left many investors asking what happened. Slowing growth and rebalancing labor markets have enabled Fed officials to continue their easing measures.

A NOTE FROM THE TRADING DESK:
07 January 2025 / 5 min read

The consensus forecast for 2025 may look like 2024 in many ways, but the differences are in the details. Many anticipate continued “normalization” in developed economies, characterized by slower (yet positive) global growth with inflation stabilizing slightly above central bank targets. 

A NOTE FROM THE TRADING DESK:
10 December 2024 / 5 min read

AB's Fixed Income Desk has published its final note for 2024, reflecting on a tumultuous year in fixed-income markets. This analysis provides insights into key successes and areas that need recalibration while setting the stage for 2025.

 

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