Wells Fargo published several reports on issues playing a role in the challenging environment today. The intent of the executive summary was to address heard often voiced by investors. Some of the top questions revolving around fixed income included:
- What is happening to bonds so far in 2022?
- Why continue to invest in bonds?
- Why is the Fed garnering so much attention this year?
- What should investors expect from the remaining three Fed meetings of this year?
- What does Fed quantitative tightening mean?
- What do you mean when you say, “financial conditions in the economy are tightening”?
- Should we be worried about liquidity in bond markets?
Equity and fixed income markets simultaneously endured negative returns in the first of the year – catching a number of investors off guard. While all major fixed indexes bounced back in July in light of receding yields, year to date, they remain negative.
Inflation? Yep; it’s stuck in gear; that is, elevated. Meantime, the broader economic environment – especially the labor market, has proved to be one tough cookie, according to gsam.com.
”Higher inflation and higher growth volatility are propelling us into a higher yield environment, marking a departure from the post-financial crisis era,” according to Whitney Watson, global head of Fixed Income Portfolio Management, Construction & Risk. “Ultimately, we think this presents opportunities in high-quality fixed income assets, such as investment grade corporate bonds and agency MBS.”