In an article for ThinkAdvisor, Dinah Wisenberg Brin discussed a recent bullish commentary on various segments of the fixed income market from John Hancock’s co-chief investment strategist Matthew Miskin. 

Miskin sees the current inverted yield curve as due to normalize in the coming months as the Federal Reserve embarks on a cutting cycle given the firm’s view that the economy should continue to decelerate along with cooling inflation. This will create a bond ‘bull steepener’ as short-term rates decline.

It sees a recession materializing over the next couple of quarters which would be a positive tailwind for fixed income. He sees opportunities in intermediate duration bonds which historically have performed the best following yield curve inversions. Further, he sees value in the space given that the average investment-grade, intermediate bond portfolio is trading at 90 cents on the dollar with a 5% yield. 

Miskin is also bullish on municipal bonds given historically attractive yields of 7% on a ta-equivalent basis for the highest earners. In terms of equities, the firm is not a believer in the current stock market rally given weakness in earnings and its expectations of a further softening of the economic picture. 

Finsum: John Hancock’s co-chief investment strategist is bullish on fixed income with a particular focus on intermediate duration and municipal debt.