Fixed Income
Equities
Alternatives
Other links
Other links
  • See all results
  • See results in Products
  • See results in Insights

You are currently viewing the United States website Institutional website. You can change your location here or visit other RBC GAM websites.
Welcome to the RBC Global Asset Management site for Institutional Investors

In order to proceed to the site, please accept our Terms & Conditions.

This RBC Global Asset Management (U.S.) Website is intended for institutional investors only.

For purposes of this Website, the term "Institutional" includes but is not limited to sophisticated non-retail investors such as investment companies, banks, insurance companies, investment advisers, plan sponsors, endowments, government entities, high net worth individuals and those acting on behalf of institutional investors. The Website contains information, material and content about RBC Global Asset Management (collectively, the “Information”).

The Website and the Information are provided for information purposes only and do not constitute an offer, solicitation or invitation to buy or sell a security, any other product or service, or to participate in any particular trading strategy. The Website and the Information are not directed at or intended for use by any person resident or located in any jurisdiction where (1) the distribution of such information or functionality is contrary to the laws of such jurisdiction or (2) such distribution is prohibited without obtaining the necessary licenses and such authorizations have not been obtained. Investment strategies may not be eligible for sale or available to residents of certain countries or certain categories of investors.

The Information is provided without regard to the specific investment objectives, financial situation or particular needs of any specific recipient and does not constitute investment, tax, accounting or legal advice. Recipients are strongly advised to make an independent review with an investment professional and reach their own conclusions regarding the investment merits and risks, legal, credit, tax and accounting aspects of any transactions.

Accept Decline
org.apache.velocity.tools.view.context.ChainedContext@77e5ca52
by  BlueBay Fixed Income team, S.Fitzsimmons Dec 5, 2023

The weekly fix

Subscribe to receive the latest weekly commentary

Subscribe

Key points:

  • High current coupons and levels of carry on high quality corporate debt are enticing to investors.
  • Recent positive developments on the US macroeconomic front are driving demand.
  • The market is also supported by the expectation of rate cuts next year, but there are risks to that projection.

View transcript

Hello and welcome back to the Weekly Fix, my name is Stephen Fitzsimmons, Institutional Portfolio Manager on the BlueBay US Fixed Income team at RBC GAM here in Stamford, Connecticut.

According to Bloomberg, at the end of last week, 90% of new US high grade bonds issued over the course of the week traded tighter in secondary markets. The week prior, we saw 100% of US high grade bonds issued during the week trading tighter in the secondary. In terms of upcoming issuance, we expect to see another 15 to 20 billion this week, with issuance front-loaded toward Monday.

What does this mean to us? Clearly, there continues to be robust investor demand for high quality paper in the primary and secondary markets in the corporate bond space. High current coupons and levels of carry are enticing investors back into the market. We believe jubilation related to recent positive developments on the US macroeconomic front is helping drive this demand. Additionally, market participants seem to be indicating that we will start to see the Fed easing financial conditions in the US by-way of rate cuts over the course of 2024… another potential tailwind to the space.

Although we agree recent CPI prints, retail sales and last week’s strong GDP numbers come together to paint a picture that a soft landing in 2024 is probable, there are of course always risks to the downside. If the labor market fails to exhibit resiliency and if inflation remains super sticky – it could be hard for the Fed to cut rates materially and this may negatively impact growth through 2024.

As such, we remain ever vigilant in largely avoiding deeply cyclical names in our portfolios in this environment, as well as names that do not have pricing power in the face of rising costs.

Soft landing or hard, we believe the market environment in 2024 will be one that benefits active asset management and credit selection. With where rates are and the various technical tailwinds to the space we see currently, we remain very excited about fixed income in this active context.

As always, thank you so much for your time, happy holidays, and good luck trading.

Related content

Disclosure

This document is provided by RBC Global Asset Management (RBC GAM) for informational purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM or its affiliated entities listed herein. This document does not constitute an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax, or other advice and such information should not be relied or acted upon for providing such advice. This document is not available for distribution to investors in jurisdictions where such distribution would be prohibited.

RBC GAM is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc., RBC Global Asset Management (U.S.) Inc., RBC Global Asset Management (UK) Limited, and RBC Global Asset Management (Asia) Limited, which are separate, but affiliated subsidiaries of RBC.

In Canada, this document is provided by RBC Global Asset Management Inc. (including PH&N Institutional) which is regulated by each provincial and territorial securities commission with which it is registered. In the United States, this document is provided by RBC Global Asset Management (U.S.) Inc., a federally registered investment adviser. In Europe this document is provided by RBC Global Asset Management (UK) Limited, which is authorised and regulated by the UK Financial Conduct Authority. In Asia, this document is provided by RBC Global Asset Management (Asia) Limited, which is registered with the Securities and Futures Commission (SFC) in Hong Kong.

Additional information about RBC GAM may be found at www.rbcgam.com.

This document has not been reviewed by, and is not registered with any securities or other regulatory authority, and may, where appropriate and permissible, be distributed by the above-listed entities in their respective jurisdictions.

Any investment and economic outlook information contained in this document has been compiled by RBC GAM from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM and its affiliates assume no responsibility for any errors or omissions in such information.

Opinions contained herein reflect the judgment and thought leadership of RBC GAM and are subject to change at any time. Such opinions are for informational purposes only and are not intended to be investment or financial advice and should not be relied or acted upon for providing such advice. RBC GAM does not undertake any obligation or responsibility to update such opinions.

RBC GAM reserves the right at any time and without notice to change, amend or cease publication of this information.

Past performance is not indicative of future results. With all investments there is a risk of loss of all or a portion of the amount invested. Where return estimates are shown, these are provided for illustrative purposes only and should not be construed as a prediction of returns; actual returns may be higher or lower than those shown and may vary substantially, especially over shorter time periods. It is not possible to invest directly in an index.

Some of the statements contained in this document may be considered forward-looking statements which provide current expectations or forecasts of future results or events. Forward-looking statements are not guarantees of future performance or events and involve risks and uncertainties. Do not place undue reliance on these statements because actual results or events may differ materially from those described in such forward-looking statements as a result of various factors. Before making any investment decisions, we encourage you to consider all relevant factors carefully.

® / TM Trademark(s) of Royal Bank of Canada. Used under licence.

© RBC Global Asset Management Inc., 2023