Fixed Income Investment Strategy — October 2024

October 21, 2024 — Fixed Income Investment Strategy provides an overview of Sage’s market outlook and sector positioning.

Market Outlook

• Fixed income investors who weathered rate volatility in anticipation of stronger returns were rewarded in the third quarter with 5%-plus returns in core fixed income. October has been a different story, however, as stronger data has pressured yields and caused Fed easing expectations to retreat somewhat.
• Despite increased volatility the macro picture still points to solid returns for fixed income over the coming 12 months. Yield levels are still near 20-year highs, making income generation meaningful with attractive relative value vs. low equity earnings yields. We expect this to keep flows strong and add support to spreads and fixed income overall.
• We head into the home stretch of 2024 positioned accordingly, maintaining full duration and a curve bias favorable for the bull steepening that is typical in a Fed easing cycle.