Kamyar Hazaveh's blog

Fixed income in a flat yield curve environment

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The difference between short-term and long-term yield in the U.S. and Canada is the narrowest in a decade. The flatness of the yield curve has been the subject of financial media coverage as a recessionary sign. This article summarizes our research on the meaning and impact of a flat yield curve on financial markets.

Fixed income mid-year review: Mistaking cyclical bounce for a turn in inflation trend

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A lot has changed since we positioned our various portfolios for the reflation trade back in the summer and fall of 2016. The initial euphoria around the new administration in the US has faded, continental Europe has rejected the populism that rocked the Anglo-Saxon world, and emerging market assets have seen a noticeable recovery.

Fixed income – The year ahead and how we plan to manage it

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A look back on 2016

Last year was a volatile environment for both safe haven and risk assets. Deflation and risk-off dominated the first half damaging credit markets that led to new lower lows in global sovereign bond yields. Since mid-summer, indicators of U.S. and global growth and inflation have been in an uptrend lifting bond yields. This note lays out our fixed income outlook1.

The environment – We focus on cyclical developments in the economy

The role of long bonds in return-seeking portfolios

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Investors with long dated liabilities such as defined benefit pension plans and insurance companies are familiar with the use of long government bonds to hedge their interest rate exposure. The most successful of these organizations, have followed a disciplined approach to progressively add to their liability-focused, fixed-income programs regardless of the level of interest rates.

Investing in an unforgiving world

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The first quarter of 2016 has been marked by additional monetary easing by major central banks venturing further into negative interest rates and direct credit easing in response to a weakening global economy. It is a symptom of the ongoing global debt default that to support the current market valuations (and avoid a crisis of confidence), interest rates have to be lowered. This was also the case in Q1 2015.


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