UBS On-Air: Market Moves Top of the Morning: Fixed Income Strategist - First-Half Review
Jun 11, 2024
Leslie Falconio and John Murtagh of UBS CIO discuss fixed income performance drivers, rate volatility, Fed rate cut expectations, upcoming FOMC meeting, US monetary policy, and recommendations for fixed income investors in agency MBS, investment-grade corporates, tips, treasuries, and munis for incremental income and price appreciation.
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First Half 2024 Fixed Income Performance
- The first half of 2024 saw a significant repricing of Fed rate cut expectations.
- This led to upward pressure on treasury yields after a 2023 rally.
Market Sensitivity to Economic Data
- The market has been highly sensitive to economic data, particularly CPI, with 80% of 10-year yield increases happening near CPI releases.
- This reflects market anticipation of the Fed's actions.
H2 2024 Economic Outlook
- The fixed income market anticipates an economic slowdown, not a hard landing, with consumers becoming more selective.
- This should push yields lower in H2 2024.