Perspectives Blog

2014 outlook for fixed income investors

Colin J. Lundgren, CFA, Head of U.S. Fixed Income | December 20, 2013

Our 2014 forecast for the U.S. economy is optimistic, with more and more of the headwinds that have been restraining growth starting to fade away. For fixed income investors, we see opportunities in corporate bonds, municipal bonds and some emerging markets. Although we expect further rises in interest rates in 2014, bonds continue to offer not only income for investors, but also an important source of portfolio diversification. Watch: 2014 ou…

What the end of QE means for investors (video)

Zach Pandl, Portfolio Manager and Strategist | November 17, 2014

Watch Zach Pandl, portfolio manager and strategist, explain what the end of the Fed’s Quantitative Easing program means for investors. QE is over because it succeeded, which is good news. With cash yields still close to zero, staying invested is critical to maintaining purchasing power. Although we still think there are opportunities in the bond market, investors should be wary about too much interest rate risk in their bond portfolios….

Slack and inflation

Zach Pandl, Portfolio Manager and Strategist | July 21, 2014

…estors should remain cautious around U.S. interest rate risk despite a solid first half of 2014. Excerpted from Zach Pandl’s newest whitepaper Structural weakness in labor force participation means there is less slack in the labor market than commonly believed. Limited spare capacity in turn implies earlier rate hikes and more risk that inflation eventually overshoots the Federal Reserve’s target. In recent decades that target was “minimum unemp…

Inflation — The usual suspects

Zach Pandl, Portfolio Manager and Strategist | August 11, 2014

Four factors figure empirically into how and why inflation moves: (1) commodity prices, (2) spare capacity, (3) changes in exchange rates, and (4) monetary policy. These same factors argue for a gradual recovery in U.S. inflation in the year ahead, which could be a headwind for high-quality fixed-income returns. In contrast to U.S. markets, in markets with prospects for a trend lower in inflation expectations (e.g. certain pockets of EM), falli…

Special report – 2014 mid-year review and outlook

Columbia Management, Investment Team | June 16, 2014

…rst half of 2014 and share their insights into what may be ahead for the second half of the year. Interest rates Zach Pandl, Portfolio manager and strategist Review: Government bond yields declined in early 2014, both in the U.S. and in other developed market economies. This surprising change in course after increases in 2013 caught many investors off guard. In our view, declining interest rates reflect renewed pessimism about the global economic…

Is a stock market correction coming?

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | December 16, 2013

…e of recession, the stock market tends to perform fairly well. Neither Marie Schofield (our chief economist) nor Zach Pandl (our chief interest rate strategist) assigns a material probability to recession in the United States next year. 2) Financial accident. Of course, you can never know for sure, but we believe this is not likely in the age of financial sector deleveraging, Dodd Frank, etc. In addition, we are not currently observing speculativ…

Interest rates in a highly indebted economy

Zach Pandl, Portfolio Manager and Strategist | October 13, 2014

In a highly indebted economy, there is no fixed cap on the level of interest rates. Any increase in interest rates must be consistent with tolerable debt service ratios, the existing stock of debt and private sector savings. It’s in this context where Fed officials’ delicate approach to the exit process looks most understandable. The deleveraging constraint Last week the Federal Reserve reported that U.S. households’ mortgage debt service rati…