Economic turning points
With the first quarter of 2023 behind us, some economic tides are starting to turn.
1. After a year of aggressive central bank tightening, the peak policy rate for the cycle is likely on the near-term horizon, which has important implications for fixed income investors.
2. Historically, a pause in the hiking cycle marks a turning point in duration, creating a tailwind for fixed income.
3. As peak policy rates come into focus, risk assets may enjoy a relief rally initially, but spreads are likely to come under renewed pressure later in the year as recession fears grow.