Fynsa
It is time to sell the short-term deposit and buy the long-term deposit, looking for better rates in issuers that offer a higher premium.
For the time being, it is hard to think that the market alone will continue with rate rallies without a more committed Fed on the way to easing interest rates.
Market conditions have driven Agency MBS valuations to historically cheap levels, making them an attractive investment.
In our 2024 Asset Allocation Outlook, bonds emerge as a prominent asset class.
The data indicate that we appear to be reaching the peak of this tightening cycle, as highly restrictive financial and credit conditions will begin to be felt more strongly in activity in the coming quarters.
We believe that a space is opening up for Distressed Debt, where the less liquidity we find in the market, the greater the pressure these managers can exert on the purchase price of an asset.
While the Fed Chairman "kept alive" the option of raising rates at subsequent meetings, it appears that they will remain unchanged after the next meeting.
Historically, fixed income begins to outperform cash before the Federal Reserve reaches its maximum interest rate.
In our base case, we expect some moderation in U.S. interest rates in the coming months and recommend considering moving gradually out of cash into longer maturities and corporate bonds.
The expected drop in the price of the dollar to the vicinity of 800 should not occur until next year.
