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Quarterly Outlook

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Decoding the Global Macro Environment
4Q 2024 Strategy Outlook

Thanks to consistently accommodating financial conditions, the relatively elevated market valuations of recent months have been able to sideline these uncertainties, benefiting instead from the attractive prospect of a U.S. soft landing AND sizeable Fed rate cuts in the next 12 months. This is also why we believe that cautious security selection and solid structuring are key to the resilient portfolios needed to navigate what on the surface appears to be a favorable equilibrium, but underneath, has notable elements of potential volatility.

Research

Emerging Markets Fixed Income
Poised to Thrive in the Fed’s Easing Wave

…we believe the upcoming easing cycle by the Federal Reserve represents a significant opportunity for EM debt. Historically, EM debt has performed well following U.S. rate cuts, and with EM central banks likely to lower rates to stimulate growth, the asset class is well-positioned for strong returns. Attractive yields, supported by solid fundamentals and a rebound in global risk sentiment, further enhance its appeal…

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Decoding the Global Macro Environment
3Q 2023 Strategy Outlook

This past quarter certainly witnessed the tug-of war between the policy trilemma facing central banks and climbing of the wall of worry that was characterized between positive carry and pull to par. We would not be surprised to see the next phase resulting in inflows that chase the recent returns and propel the asset class higher. We expect continued volatility that will permit for tactical positioning of capital driven by our top-down and bottom-up perspectives on the asset class and will therefore, continue to respect and embrace the volatility in the markets by planning the trade and trading the plan.

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Decoding the Global Macro Environment
2Q 2023 Strategy Outlook

No one ever said removing the punch bowl would come without challenges. Aggressively raising interest rates and withdrawing liquidity from the system (QT) made fender benders / financial accidents even more likely. One externality has been volatility, which if embraced properly is not necessarily a bad thing. Going forward, we must navigate the trilemma between growth, inflation and financial stability. We will continue to do so by relying upon top-down analysis, high conviction security selection, dynamic asset allocation and tactical positioning. As always, we will look to exploit the volatility in the marketplace by planning the trade and trading the plan.

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Decoding the Global Macro Environment
1Q 2023 Strategy Outlook

After a challenging 2022 in which we witnessed one of the largest dislocations, in terms of both depth and breadth, we remain constructive on the medium to long-term prospects in our markets. Whereas 2022 was challenging for both sides of the “60/40” portfolio, we believe the 40% fixed income component of portfolios will provide compelling returns both in absolute and relative terms going forward and thus, emerging market debt should be an important return driver of fixed income portfolios. Further, we believe private credit/asset backed lending in emerging markets will continue to provide equity-like expected returns but benefit from strong risk mitigation factors including seniority, credit quality and collateral packages. Lastly, we expect special situations to continue to provide compelling non-correlated returns.

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Decoding the Global Macro Environment
4Q 2022 Strategy Outlook

Looking forward, it is hard to imagine an immediate lifting of the global growth, policy and liquidity clouds. The same goes for geo-political uncertainties, the impact of which has also been to contribute to changing globalization. As such, the analytical focus remains centered for now on the continuation of a bumpy journey to a better destination. It is a process in which markets, with time, should better differentiate between credits, thereby providing attractive investment opportunities for long-term investors.

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