Principal Asse… - Thu, 10/12/2023 - 17:45

Principal Fixed Income Perspectives

Recession takeoff delayed but not canceled. While the timing of a recession remains uncertain, unique opportunities exist for fixed income investors as we head into the final quarter of 2023.

    1. Policymakers are likely to remain hawkish, countering market expectations for rate cuts in 2023 and budgeting room for easing in 2024. This should support elevated front-end yields.
    2. With market expectations shifting toward a soft landing, credit spreads are likely to remain rangebound, exhibiting a widening bias as a recession becomes more evident.
    3. Though economic data has been resilient, key market indicators continue to signal an impending recession, and we strongly believe there is further economic slowing on the horizon.

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