UBS On-Air: Market Moves CIO Fixed Income Roundtable Series: 2Q25 performance update
Apr 23, 2025
Frank Sileo and Barry McAlinden, both Senior Fixed Income Strategists at UBS, dive into the current dynamics of the fixed income market. They discuss the performance of preferred securities, highlighting both challenges and resilient sectors amid market volatility. Sileo zeroes in on opportunities in the preferred market, while McAlinden provides insights on investment-grade corporates. Together, they explore strategic investing, emphasizing the importance of a diversified approach amidst changing interest rates and economic uncertainties.
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Volatility Creates Opportunity
- Volatility in fixed income markets creates investment opportunities despite uncertainty.
- Treasury yields have fluctuated widely, impacting asset classes differently based on equity correlation.
Leverage Risks for Closed-End Funds
- Leveraged closed-end funds face higher borrowing costs that reduce their earnings in rising yield environments.
- Non-leveraged muni funds are preferred to avoid distribution cuts and return of capital risks.
Preferred Securities Outlook
- Preferred securities demonstrate stronger correlation to equities during volatile periods, impacting performance.
- $1,000 par preferreds from high-quality issuers offer attractive tax-advantaged yields around 6.5-7%.