There are three things fixed income investors should remember heading into the New Year, says Matt Brill from the Invesco Fixed Income team.
In this short video, I outline the three things fixed income investors should remember heading into the New Year.
1. Tapering is not tightening.
The U.S. Federal Reserve is going to be injecting less liquidity into the system, but they are not tightening. So this is still good for corporations and overall corporate debt. Bottom line: We are not going to get a taper tantrum. The market is better prepared for this.
2. Anticipating the ‘overdue upgrade’
High yield is due for an “overdue upgrade.” It’s time for rating agencies to get up to speed on where these companies should be rated — for many of them that’s the investment grade level.
3. Not all emerging markets are created equal
While there’s a lot of talk about both the opportunities and risks in emerging markets — especially in China — it’s important to remember that not all emerging markets are the same. Investors should assess each market individually rather than evaluating this area as a whole.