Fixed Income Investment Strategy — April 2024

April 24, 2024 — Fixed Income Investment Strategy provides an overview of Sage’s market outlook and sector positioning.

Market Outlook

• Strong growth signals and upside surprises in data globally have boosted sentiment, but they have also clouded the outlook for rates and inflation. From an economic perspective, we expect activity to remain strong but are concerned that the underlying drivers are deficit spending from the government and increasingly debt financing on the consumer side.
• Optimism toward the growth outlook may continue to put upward pressure on rates in the near-term; however, we believe it would be premature to price cuts out of 2024, and the medium-term path for rates is still down.
• We prefer to lean into the medium-term outlook for rates rather than try to time a repricing, and thus carry full durations across fixed income strategies into Q2. Our sector positioning is geared toward income generation through security selection in credit and an overweight to MBS, which remains a favored quality tilt with attractive valuations vs. credit.