Asset Management: Asset Manager Insights

Navigating Today’s Pressure-Packed Fixed Income Markets

2015 Fixed Income Outlook:
Navigating Today’s Pressure-Packed Fixed Income Markets

For market participants, the turn of the calendar year gives rise to a variety of themes with uncertain implications. While some represent new opportunities and challenges, others may be unfinished business. For fixed income investors, it may feel as though time is standing still. Many investors expected interest rates to rise in 2014, but instead they declined throughout the year. In fact, heading into the last month of the 2014, long U.S. Treasuries are the best performing fixed income subsector, returning over 20%. As we look toward 2015, an all-too-familiar theme seems resolute: consensus is once again calling for higher U.S. interest rates and by most measures this is perhaps the most harmonious the Federal Reserve (Fed), investors and U.S. economic indicators have been since the Great Recession. Despite this broad, directional agreement, there remains a significant divergence between how much key U.S. interest rates may rise. In our view, the disparity concerning the level of interest rates is a gauge of how close one believes the U.S. is to a self-sustaining economy, without exceptionally accommodative monetary policy. We believe this to be the key question as we look ahead to 2015.

 

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Taplin, Canida & Habacht, LLC is a registered investment adviser and a wholly-owned subsidiary of BMO Asset Management Corp., which is a subsidiary of BMO Financial Corp. BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide trust, custody, securities lending, investment management, and retirement plan services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group is a service mark of Bank of Montreal (BMO).

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