Results for: Fixed-Income

After years of minimal returns, fixed income investments are experiencing a resurgence as benchmark rates rise. This change is driven by the Federal Reserve’s interest rate hikes, which have pushed yields on US Treasuries to over 4%. Investors are now earning substantial annual interest payments from government debt, and higher yields offer protection against future inflation. Various sectors, including buyout firms and money-market funds, are drawn to the stability and higher returns of fixed income investments. Despite concerns about inflation and the US deficit, experts predict this trend will continue, leading to a more normal fixed-income market with increased demand for bonds and other income-generating investments.

In a recent interview, Jeff Klingelhofer, Co-Head of Investments and Portfolio Manager at Thornburg Investment Management, shared his insights on the Fed and fixed income. He emphasized the importance of understanding the Fed’s monetary policy decisions and their potential impact on fixed income markets.

The DoubleLine Income Solutions Fund is a closed-end fund that seeks to provide investors with a high level of income. The fund primarily invests in below-investment-grade debt securities and emerging markets. While the fund has a reasonable leverage ratio compared to its peers, its low transparency and lack of recent financial information are concerns. The fund has a moderate 10.90% yield, but it has failed to cover its distributions over the past two years. Overall, the fund’s positioning is reasonable, but caution is advised due to the lack of transparency and the fund’s recent net asset value destruction.

US Treasury bond yields have witnessed a remarkable 200-week rally, the largest in 10-year yield history. This significant rally raises questions about whether yields are due for consolidation or a pullback. A key resistance level remains at the 2007 financial crisis highs. A breakout above this level could signal further yield increases, with potential targets near 6.5%.