This brief update revisits the main tenets of “The Bleak Future of Bonds” paper and provides updates to some key numbers in the aftermath of the COVID-19/coronavirus crisis and what this means for portfolio construction going forward.

Our global fixed income trading team provides valuable insights that inform the positioning in our fixed income portfolios.

Turbulence for municipals may present opportunities, and we believe that credit research is of increasing importance. 

TIPS are attractive because inflation could exceed the widely anticipated increase in consumer prices later in 2021.

Fed policymakers will not tighten monetary policy until inflation remains above 2% and job gains are robust.

Lower CLO issuance and slowing loan downgrades, along with some attractive yields, have produced value in certain CLOs.

Over the coming decade or two, bonds are unlikely to fulfill their dual role of income and capital preservation.  Bond investors will be forced to choose between income or capital preservation, and there is a good chance they could end up with neither.