The Outlook for Bonds in a Bear Market:
Guidance for Uncertain Times
Guidance for Uncertain Times
By Hunter Frey | September 2022
Key Takeaways
- Seek credit investments with uncorrelated returns
- Duration management (ideally shorter duration is essential)
- Opportunistic corporate/convertible bonds with undervalued relative pricing.
- Floating Rate (Bank Loans) hedge portfolios from interest rate risk without being a tactical shift
- Legacy NARMBS are high principal investments with a strong structural support to weather market uncertainty.
- Special Situation credit investment opportunities can deliver strongly uncorrelated returns through unique positionings.
Amid stagflation, the economic situation remains murky, though we see a clear path for monetary policy: raising rates. However, questions remain on the velocity of the Federal Reserve’s (Fed) quantitative tightening and the length needed for hawkish policy to tame inflation.