A Note from the AB Fixed Income Trading Desk
Thoughts from our Senior Portfolio Managers
February 04, 2025
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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
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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. -
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. -
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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