Fixed Income Outlook 4Q24

KEY TAKEAWAYS:

1. Yields fell across the curve as fixed income markets reacted to the Fed’s rate cut and anticipated beginning of a new easing cycle.
2. The economy continues to perform well, but persistent inflation, slowing employment growth, and limited housing turnover complicates the picture.
3. Investor demand for yield led credit spreads lower. We continue to believe markets underappreciate credit risk and feel that spreads should be higher.
4. While the Fed has embarked on a rate cutting cyle, longer term yields remain near historical averages and investment grade bonds continue to provide an attractive opportunity as part of a broader investment strategy.