Real Rates, Repriced Credit and the Case for a Short Fed Cycle
It sets out a fixed income manager's dissent from consensus rate expectations and walks through the specific segments where that view is expressed, which is useful context for advisors discussing duration and credit positioning with clients.
Summary
By the markets & outlook deskNeuberger Berman's Disruptive Forces podcast episode features host Anu Rajakumar speaking with Ashok Bhatia, the firm's Chief Investment Officer and Global Head of Fixed Income, about global monetary policy and the bond market. The discussion argues that the recent yield move has come largely from real rates rather than inflation expectations, that core U.S. inflation is still drifting lower, and that the team expects a shorter hiking cycle than the market is pricing. It closes with where the team says it is finding value across credit and rates.
- The team contends most of this year's yield move came from real rates rather than inflation expectations.
- Core U.S. inflation is described as still drifting lower, keeping the disinflation case intact.
- The team expects a shorter hiking cycle than the market is pricing.
- Areas cited for value include hyperscaler credit, BB high yield, floating rate, European financials and hard currency EM.
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