Guggenheim 1Q Fixed-Income Outlook: Important Implications of Monetary Policy Tightening to Fixed-Income Portfolios

NEW YORK, Feb. 16, 2017 (GLOBE NEWSWIRE) -- Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today provided its First Quarter 2017 Fixed-Income Outlook, “Assessing Value in a Faith-Based Rally.” Among the highlights in the 32-page report:

  • A strong corporate earnings recovery, expansionary fiscal policies, falling unemployment, and upward wage pressure should lead the Federal Reserve to raise the fed funds rate more than the market is expecting. We believe that the Fed will raise rates three times in 2017.
  • A common theme is that spreads are at relatively tight levels across the 10 fixed-income sectors reviewed in this report. As a result, spread tightening will not be the same tailwind for credit market returns that it was in 2016.
  • U.S. risk assets have rallied in part in anticipation of the successful implementation of President Trump’s growth-oriented fiscal policies, an outcome that is far from certain.

  • We are maintaining a barbell duration position, which we believe is prudent during a period of yield-curve flattening, with floating-rate assets at the short end and 10–30 year duration exposure at the long end.

  • In floating-rate securities, we believe bank loans are relatively attractive, as historically they have performed well in periods of Fed tightening.

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About Guggenheim Investments

Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with $209 billion1 in assets across fixed income, equity, and alternative strategies. We focus on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Our 275+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled us to deliver innovative strategies providing diversification and attractive long-term results.

1Guggenheim Investments total asset figure is as of 12.31.2016. The assets include $12.3bn of leverage for assets under management and $0.4bn for assets for which Guggenheim provides administrative services. Guggenheim Investments represents the following affiliated investment management businesses: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Real Estate, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.

Investing involves risk. In general, the value of fixed-income securities fall when interest rates rise. High-yield securities present more liquidity and credit risk than investment grade bonds and may be subject to greater volatility. Investments in bank loans securities involve special types of risks, including credit risk, interest rate risk, liquidity risk and prepayment risk.

This information herein is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This material contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author's opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. ©2017, Guggenheim Partners, LLC. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC.

Media Contact Ivy McLemore Guggenheim Partners 212.518.9859

Source: Guggenheim Investments