Principal Asse… - Mon, 07/17/2023 - 14:45

Looking ahead to Q3 2023: A recession on the horizon

With the likelihood of a recession growing, the landscape for fixed income investors is shifting as we enter the third quarter of 2023.

  • After raising policy rates 500 basis points (bps) over sixteen months, the end of the Federal Reserve’s hiking cycle is now within sight, shifting duration from a headwind to a tailwind.
  • The forward-looking trend for global policymakers in aggregate has become clearer, with fewer hiking more, more hiking less, and some not hiking at all.
  • With several historically reliable economic indicators signaling that a recession is on the horizon, the stage is set for fixed income to perform well; particularly, high-quality assets.

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