FICC Focus Macro Matters: Federated Hermes Gallo on Fixed Income Outlook
Sep 11, 2025
RJ Gallo, Deputy Chief Investment Officer for Fixed Income at Federated Hermes, dives deep into the current state of the Treasury yield curve and its future movements, highlighting the impact of recent government policies like tariffs. He discusses the quality of economic data and the reliability of macroeconomic indicators, particularly in the context of political influence on the Federal Reserve. Gallo also outlines yield curve strategies and examines opportunities within the municipal bond market, emphasizing the complexities of investment in today's environment.
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Core Drivers Of Fixed-Income Markets
- RJ Gallo stresses inflation, growth, Fed policy, and relative valuation as the core drivers of fixed-income markets.
- He says inflation dominated post-pandemic markets and fundamentals plus Fed actions now guide allocations.
Soft Landing Expected Despite Headwinds
- Gallo expects a soft landing with the Fed easing and focusing more on employment.
- He views tariffs and fiscal moves as complicating factors that could add inflation and slow growth.
Trust The Data But Reinforce It
- Gallo defends U.S. macro data quality while noting survey limitations and the need to reinvest in data collection.
- He warns politicizing statistical agencies undermines trust in data.