Fixed Income Investment Strategy — August 2024
September 5, 2024 — Fixed Income Investment Strategy provides an overview of Sage’s market outlook and sector positioning.
Market Outlook
- Any outlook discussion still starts and ends with the Fed and its upcoming easing cycle. Market expectations are firmly priced for a September start and a sustained cutting cycle that ends at a federal funds rate of around 3% by late 2025/mid-2026.
- Economic trends will ultimately determine the rate path, and fixed income markets appear more appropriately priced for downside economic risks than other asset classes.
- Despite an optimistic view for total returns, we also subscribe to a cautious allocation within fixed income as overall yields are high, but spreads are tight – so the risk/reward is not favorable to “reach for yield.”
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