Bond investors: Don’t fear the Fed

How diversified credit portfolios can help defend against rising interest rates

Waldner_Rob_sm_150dpi_RGBIn December, the US Federal Reserve (Fed) raised interest rates, as predicted, and raised expectations for more increases in 2017. At Invesco Fixed Income, we believe one of the best ways to handle a rising interest rate environment is to have a portfolio diversified across different credit-related asset classes. Below, we answer some frequently asked questions about how we approach diversification.

What is IFI’s overall outlook for 2017?

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Can the Trump administration make the American economy great again?

Trump’s tax and infrastructure proposals will soon face the reality of US debt and monetary policy. We analyze what to expect next.

James Ong

Since the US election, financial markets seem to have priced in a significant boost to growth and inflation under a Trump administration. It is still early in the presidential transition, yet the US equity markets have rallied and bonds have sold off in an apparent anticipation of major fiscal policy easing and deregulation under soon-to-be President Trump. The Trump campaign was generally unspecific about its favored policies in most areas, and it also remains unclear which policies will actually materialize. However, we attempt to delve into President-elect Trump’s proposed policy agenda, acknowledging that uncertainty remains high.

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Countdown to the debt ceiling debate

As the March 15 deadline approaches, Treasury bills could become increasingly volatile

Justin Mandeville

In the first quarter of 2017, a newly minted Congress will be tasked with approving an increase in the US government’s debt limit — the so-called “debt ceiling” — which is set to expire on March 15, 2017. If the debt ceiling is not raised, the Treasury bill market could experience volatility as investors adjust to a potential reduction in the supply of Treasury bills.

What is the debt ceiling?

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Convertible securities: What do we see ahead after the election?

We explore which policies could bode well for this asset class in 2017

Stuart NovickSince the November elections, the Invesco Convertible Securities team has gotten a number of questions from investors about how the environment might change for convertible securities under the new Trump administration. While it’s too early to know which proposals will become policy, here are three potential developments that could work in favor of the US convertible securities market, if they come to pass.

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Fed hikes rates for second time since crisis

The central bank expresses a more hawkish view than expected for 2017

corum9431_8x10The Federal Reserve (Fed) raised interest rates today by 0.25%, only the second rate hike since the global financial crisis in 2008, to a range of 0.5% to 0.75%. The statement that accompanied the policy meeting reflected signs of a stronger labor market, moderate growth and improving inflation. Additionally, the Fed noted that it views risks to the economy as “roughly balanced.”

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Fixed income: Assessing the landscape for policy changes and asset class fundamentals

2017 Investment Outlook series

Waldner_Rob_sm_150dpi_RGBMacro

Invesco Fixed Income’s 2017 macro outlook is likely to be significantly influenced by the policy direction of newly elected US President Donald Trump and his administration. We believe there are a few key policy elements that will likely be implemented early in the Trump administration. First, fiscal easing: Proposed tax cuts and possible infrastructure spending would potentially boost growth across the board in the US. Second, Trump has promised deregulation of the US economy. In particular, he has indicated a desire to reform the Affordable Care Act (also known as Obamacare), reduce regulation on the energy industry and amend the Dodd-Frank Act. These changes are also likely to boost US growth in the near term, in our view. Third, Trump won using an anti-trade message. We would expect some impediments to free trade to be implemented in the near term. Such measures may have a medium-term negative impact on global growth.

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