Stephen Cianci, CFA, Senior Managing Director, Senior Portfolio Manager, Co-Head of Global Fixed Income Team and Lesya Paisley, CFA, Portfolio Manager, Global Fixed Income Team at MacKay Shields discuss the state of fixed income and where they see the biggest opportunities in 2022.
2021 presented a major shift in fixed income markets from historic economic stimulus and easy economic policy to the potential for accelerated tightening headed into 2022.
Cianci and Lesya explain how investors can take advantage of the current dislocation in the market, and highlight some key investment opportunities and risks.
Mackay Shields’ PM warn investors to expect heightened volatility early and will reduce their allocation to short-term debt in order to mitigate the risk of a flat yield curve. The fixed income markets will be watching the Fed’s moves very carefully and may show strong reactions to unexpected rate hikes or a staunch monetary position.
Where 2021 was the year of fallen angels, firms that were once investment grade that moved to junk bond status, 2022 is positioned to be the year of rising stars, firms that have improving corporate credit and have potential to move into investment grade status. The consumer sector is also poised to have another strong year, as savings levels, consumer confidence and the labor market remains steady. Securitized credit card and auto debt loans are likely to experience expedited repayment.
Cianci and Lesya also weigh in on the long-term effects of inflation, infrastructure spending and the continued performance of the housing market.
For more insights:
Top 5 Fixed Income Market Insights for 2022
Webcast Replay – Transition Leads to Opportunity: Fixed Income in 2022 On Demand Soon.
MacKay Shields, a New York Life Company, is a global asset management firm specializing in income and equity solutions. Founded more than 80 years ago, Mackay Shields takes a boutique approach to investment management, maintaining a size big enough to be influential in the markets, but nimble enough to drive results for clients. The active manager leans into a high-conviction strategy and combine robust bottom-up research with a fundamental macro perspective in order to capture alpha and manage unnecessary downside risk.