Fixed Income
Fixed Income Investment Outlook 4Q 2022
Policy Stays in the Crosshairs
Despite volatility, the basic storyline of inflation and the Federal Reserve should continue to drive market behavior.
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Fixed Income
CIO WEEKLY PERSPECTIVES
Shooting Down the Hawks
As the U.S. Federal Reserve’s messaging gets blurrier, markets are focusing on the data.
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Fixed Income
NB Blog
Thoughts from our fixed income investment professionals on the evolving state of global markets and the macro economy.
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Fixed Income
PLATFORM OVERVIEW
The comprehensive and global nature of our platform and investment process enables our team to offer a variety of focused and multi-sector solutions to meet unique investor needs.
INVESTMENT GRADE
NON-INVESTMENT GRADE
EMERGING MARKETS
MUNICIPALS
MULTI-SECTOR
PRIVATE CREDIT
OUR PHILOSOPHY
Bond markets often fail to price in complexity and cross-currents. We believe a value-oriented approach based on process-led investing, a commitment to research and an integrated global approach can capitalize on these market inefficiencies
Process-Led Investing
Our process combines macro inputs, relative value analysis and fundamental research to drive informed decision-making and consistent investment performance
Commitment to Research
Fundamental research that integrates ESG considerations allows for a differentiated understanding of potential value and, more importantly, the risk of loss
Integrated Global Platform
Continuous collaboration is at the center of our effort as it allows for the best of investment insights globally to be reflected in portfolios
OUR PLATFORM
$181bn
of assets under management across an integrated global platform comprised of 196 investment professionals, including 75 research analysts
INVESTMENT GRADE
NON-INVESTMENT GRADE
EMERGING MARKETS
MUNICIPALS
MULTI-SECTOR
PRIVATE CREDIT
40 YEARS OF MANAGING FIXED INCOME ASSETS
ESG, SUSTAINABLE & IMPACT1
Material environmental, social and governance factors are an important driver of long-term investment returns from both an opportunity and a risk-mitigation perspective
ESG-Integrated
Our public fixed income strategies evaluate ESG factors in the fundamental credit research process
Proprietary Views
2,500+ Systematically developed NB ESG Quotient™ ratings for credit issuers based on financially material factors
Customized ESG Solutions
Innovative implementation to address a range of ESG goals, including net zero in multi-sector credit
ACTIVE ENGAGEMENT2
We believe close engagement with management on ESG issues is an integral part of managing risk in our role as direct providers of new capital
1,400+
engagements with fixed income issuers
50%
on environmental issues
49%
on social issues
76%
on governance issues
Thoughts from our fixed income investment professionals on the evolving state of global markets and the macro economy
INSIGHTS
An Emerging Opportunity
If you are one of the many investors looking positively at high yield bonds, you might want to consider emerging markets debt, too.
Shooting Down the Hawks
As the U.S. Federal Reserve’s messaging gets blurrier, markets are focusing on the data.
Solving for 2023: Back to the "Old Normal"
Our senior investment leaders discuss their market and investment themes for the coming year.
Tighter Conditions Begin to Squeeze the Economy
As the economy slows, an epic climb in short-dated rates and bond yields appears to have shocked investors into accepting the prospect of stickier inflation, but they still seem reluctant to price for substantially lower earnings.
Schooling the Sovereigns
Bond markets appear to be disciplining policy inconsistencies, both within sovereigns and among them.
Making Sense of Markets and Policy Change
(16:00) From the Fed’s rate hikes to the BoE’s historic fiscal stimulus package, how should investors make sense of policy actions occurring around the world right now?
Policy Stays in the Crosshairs
Despite volatility, the basic storyline of inflation and the Federal Reserve should continue to drive market behavior.
A High-Yielding Haven
As an ever-more-aggressive rate-hiking cycle rocks the financial markets, might corporate credit offer a space that is both remunerative and relatively calm?
Euro Parity: Threshold or Boundary?
The euro is subject to enormous economic forces that could equally be very positive for the currency or the cause of an even greater fall.
SDGs: A Framework for Investing
(28:35) How can investors utilize the UN’s Sustainable Development Goals as an informative framework to achieve better investment outcomes?
Inflation is Hot—and Could Stay Hot
Autumn and winter should bring respite from the northern hemisphere’s punishing summer heatwave, but we don’t think they will ease the inflation temperature.
Into the Inflationary Slowdown
As inflation persists and recession risks rise, our Asset Allocation Committee sees more yield potential in fixed income and favors commodities for ongoing inflation exposure, but remains cautious in equities.
Building Value as Conditions Tighten
We anticipate resilient fundamentals, but also volatility tied to inflation and higher short rates.
The ECB’s Trilemma
Are we seeing the start of another eurozone crisis, or can the ECB fashion an effective tool to manage volatile southern European bond spreads?
The Two-Way Market Persists
The search for value is on, particularly in short to medium duration.
Smoothing Long-Term ESG Transition
Our Non-Investment Grade Credit team explores key issues and trends facing issuers.
Alternative Data: Workforce Recovery and the Great Resignation
More displaced workers seem ready to come back into the labor force, but employers may need to watch their highly compensated “stayers.”
How to Keep Energy Going and Going…
(21:20) Energy markets have been dealing with the implications of ongoing inflation, ESG and geopolitical factors that have changed the investment landscape globally, so what’s next for the sector?
A Value Opportunity in Hybrids
Recent spread-widening appears to reflect concern about rising rates incentivizing extensions, and an economic slowdown incentivizing coupon deferrals—concerns we regard as significantly overstated and a source of attractive valuations.
EMD as a Hedge Against Inflation
Inflation concerns have caused investors to search for income with lower duration, and we believe Asia high yield delivers on this front.
Transitioning to Net-Zero in Credit Portfolios
From defining and setting interim targets from day one, to the critical role of bondholder engagement, we reflect on the process of putting together a major net-zero credit portfolio.
Short Duration High Yield: Replacing Rates Risk With Credit Risk
Short-duration high yield could be an under-explored option for investors who need current income to meet short-term liabilities, but cannot afford the interest rate risk that would accompany a search for yield in longer-dated bonds.
Rethinking the Credit Liquidity Continuum
As private credit markets have expanded, matured and democratized, eligible investors can now, in a cost-effective and operationally efficient manner, combine liquid and less-liquid credit assets in one portfolio. This allows investors to increase yield profile and potentially reduce volatility and correlation.
Regime Change
While we do not anticipate a recession over the next 12 months, the prospect of slowing growth and stubborn inflation has led us to downgrade our view on equities, and prepare for a new regime in which real assets could generally perform better than financial assets such as stocks and bonds.
Understanding Short Duration for the Long Run
(21:01) The current High Yield market seems to display the characteristics that could make it an interesting investment opportunity, but does it answer an investor’s question of, will I get paid back?
Has Fear of the Fed Peaked?
As investors continue to digest the likely path of this tightening cycle, we think the dramatic moves of recent weeks are set to ease, laying a good foundation for credit investors.
Investing Through Inflation and Growth Uncertainty
Recession seems unlikely this year—opening up opportunities in credit.
How to Get the Most From Private Placement Debt
Private Placements can offer fixed income investments with enhanced diversification, risk-adjusted yield and downside mitigation, and as demand grows, we believe investors could benefit from an independent route into the market that is better aligned with their needs.
Fixed Income Amid Inflation
What does the current inflationary environment mean for multi-sector fixed income portfolios?
Senior Floating Rate Loans: A Low-Cost Hedge Against Inflation
Where to find yield without duration when inflation is elevated.
Uninvestable Russia
We survey the impact on worldwide fixed income markets of the devastation in Ukraine and the sanctions against Russia, and send our thoughts to those in the heart of the conflict.
Multi Sector Fixed Income Team Outlook
(7:13) Jaina Varsani and Ashok Bhatia discuss the fixed income outlook for 2022 and update on the positioning of our multi-sector fixed income funds.
Emerging Sovereigns and Sustainability
Global sustainability cannot be achieved without sustainability in the world’s poorer countries—so how can we address the challenges of sustainable investing in emerging markets sovereigns?
How Deep Is EUR Love?
Thursday’s 7.5% U.S. inflation print reintroduced some volatility, but we still think the euro is building a base for a long-term relationship with its admirers.
Are Markets Signaling a Slowdown?
We see no sign of impending recession in calm credit markets, and in our view the flattening Treasury curve likely has more to do with the market’s failure to recognize growing structural inflationary forces.
Solving for a Year of Inflections
The Solving for 2022 delegates voted on what they think will be this year’s best-performing investment category—and here’s why we think they are right.
Hike Rates and Carry On
A positive economic outlook makes the case for holding risky assets through 2022, in our view, but higher rates are likely to mean higher volatility: we therefore favor a focus on income or “carry” from risky assets, alongside strategies with the potential to withstand price volatility.
Persistent Inflation, Policy-Driven Volatility
The evolution of inflation and central bank policy will likely drive higher market volatility in 2022.
New Year, New Monetary Policy
As markets adjust for an environment of tighter monetary conditions, we preview the key themes of our forthcoming Fixed Income Investment Outlook.
Outlook 2022
The heads of our investment platforms welcome the New Year with their views for 2022.
The Most Important Rate in the Whole Wide World
Markets may be missing the importance of record-low real rates, and the potential impact if they start to rise.
The Fight Against Inflation Has Begun
We think that inflation, central bank policy and real rates will define the battlefield for markets in 2022—but will the most volatile skirmishes come sooner or later in the year?
The Future State of Real Estate Investing
(17:33) Real estate, both in the public and private markets, can act as a diversifier during times of uncertainty. But what are the other factors to consider within this asset class?
Solving for 2022: Brad Tank on Fixed Income
(7:30) As 2021 concludes, the leaders of our investment platforms got together to debate and identify the key themes that they think will guide investment decisions in 2022.
Real Rates Are the Key to This Cycle
Most of the consensus trades for 2021 failed in the second half of the year, and we think understanding why could be critical to unlocking the rest of this unique cycle.
It’s Quitting Time: Exploring Labor Market Dynamics
(18:18) Known as “The Great Resignation” or “The Big Quit”, this phenomenon has been turning heads—but how long might this trend last? And what effects might we see going forward?
Tremors in Credit and Currency Markets
November’s modest uptick in volatility, driven by a recalibration of the market’s macroeconomic expectations, could be a sign of things to come.
Global Corporate Credit ESG Engagement Report
Environmental, social and governance (ESG) factors continue to impact the global credit markets. This year, our Credit Research and ESG Investing teams explored engagement issues labor relations, health and safety, climate change and long-term business strategy.
Inflation Could Unbalance Policy and Portfolios
As inflation pressures build and investors question central bank policies, we think it’s increasingly important to diversify against market volatility and rising prices.
Solving for 2022: Entering a New Age
Our senior investment leaders look to the coming year in the global economy and markets.
Central Banks Emerge From Hibernation
Rates volatility reflects a change in the inflation narrative, and could accelerate central bank policy adjustments.
Bring On the Transition
A period of changing policy could bring new opportunities to add to yields in the municipal market.
Sustainability in Emerging Markets Debt
Ignoring sustainability in emerging markets debt is, for want of a better term, no longer sustainable.
El Salvador and Bitcoin
Establishing the cryptocurrency as legal tender is a risky move, but also carries some potential benefits.
Public/Private Investing: Fixed Income at a Crossroads
Drawing on multiple fixed income asset classes can help investors navigate varied market environments.
Clearing the Hurdles
On a 12-month horizon, this looks to us like an attractive environment for risky assets, but the inflection point in the current cycle is proving particularly volatile: adopting a more defensive view in the short term could help investors clear the immediate hurdles.
Caution Today, Opportunity Tomorrow
We think a more cautious stance represents a prudent approach to an already volatile inflection point between early-cycle recovery and mid-cycle expansion.
China And Europe: Driving Fixed Income Volatility, With More To Come
Recent developments have global reach and could create more enduring market impacts.
The Inflation Generation
Temporary price spikes over the past 20 or 30 years have all passed without sparking a general rise in inflation, but here are four reasons why we think this time is different.
CAT Bonds: Finding Reassurance in Reinsurance
(20:12) With flooding, wildfires and hurricanes continuing to wreak havoc around the globe, how might investors want to consider these natural catastrophe risks within their portfolios?
Evergrande Heads for Default
We believe systematic risk beyond the Chinese property market remains limited.
ECB Policy and Bunds Are Set to Move
Ahead of the key European Central Bank policy meeting on September 9, we offer our views on what will likely change, what may not, and what it could mean for the Bund yield.
EM Corporate High Yield 2021 Default Outlook – Midyear Review
We expect a marginal uptick in defaults from our original estimates, given rising China corporate default risk offset by an improving outlook for much of the emerging markets.
Don’t Fear the Taper
A potential reduction in the Fed’s purchases of agency mortgage-backed securities could open up opportunities for investors.
Private Debt, Capital Solutions and the Early-Cycle/Later-Cycle Paradox
Early-cycle growth prospects should incentivize investment, but later-cycle valuations can give pause: Private debt and capital solutions could resolve the paradox.
Ten for 2021—Midyear Update
We check in on the key themes we anticipated from the economy and markets in 2021.
Developing a Roadmap for ESG Performance
Neuberger Berman’s Engagement Series presents insights and case studies on our dialogue with companies, government entities and other securities issuers.
The Great Housing Diaspora of COVID-19
(19:35) As a result of mass deurbanization during the pandemic, the residential housing markets have seen unprecedented buyer activity over the last several months. But as buyer demand continues to saturate the market, where does that leave supply?
Technical Storm Drives Treasury Yields Lower
Light summer trading and overstretched short-duration positioning have led to a slump in rates—but is there anything more fundamental in the move?
From Hanging Ten to Choppy Waves
Does a change in the weather forecast at the Federal Reserve signal an end to the early stage of this recovery cycle?
Course Correction or Policy Framework Change?
Faced with higher inflation numbers, the Federal Reserve has begun to create more meaningful parameters around its evolving stance on monetary policy.
Two-Way Markets Are Back
After nearly a year going up in a straight line, questions about inflation, the economic cycle and central bank messaging have brought more push and pull back into markets.
The Great Reset: Rethinking Globalization
In the first of our conversations about the post-pandemic landscape, Erik Knutzen spoke with economist Nancy Lazar about the future of globalization.
Bond Yields Under a More Hawkish Fed
A more hawkish Fed may not lift Treasury or investment grade credit yields, and that raises important questions for fixed income investors and asset allocators.
Roaring Twenties, or Back to the Late Teens?
This is a truly singular global recession and recovery, and it makes portfolio diversification both vital and challenging.
Are Central Banks Risking Their Independence?
Monetary policy institutions may be straining their credibility, which increases the likelihood of political encroachment and threatens our hard-earned victory over volatile consumer prices.
Non-IG News: An Update on the Cruise Industry
(6:41) In this video, our Senior Research Analyst, Adam Howaniec, provides an update on the Non-Investment Grade Cruise Industry.
Public vs. Private Credit: Competitors or Allies?
(19:50) Over the course of more than a decade, private debt has been in high investor demand. But how does private debt come into play alongside public fixed income markets?
The State of BBBs: Here to Stay
A significant, if misunderstood, market segment continues to offer attractive investment opportunity.
REITs, Inflation and Rates
History suggests that a strong case can be made for a dedicated REITs allocation if you think inflation and interest rates are going up.
REITS and Rates
History suggests that real estate securities can be an attractive investment if you expect inflation and rates to go higher.
A Crack in China’s Debt Foundations
Bonds issued by China’s biggest distressed debt asset manager just lost 40% of their value—how concerned should we be?
The Temperature’s Rising
As Treasury yields climb and assets geared to the recovery race ahead, the Asset Allocation Committee asks, will the economy overheat, and should investors consider rebalancing?
Real Yields, Inflation Breakevens and Risk Assets: The Changing Environment
Investors need to position themselves for a different and more complex environment.
Striving for a Net-Zero Investment Climate
(20:45) Climate change and achieving net-zero carbon emissions are at the forefront of global policy issues today, but how can investors make an impact when it comes to their portfolios?
Rising Stars and the Treasuries Sell-Off
Higher yields have so far left the credit market largely unscathed, but they have changed the balance of opportunity.
Senior Floating Rate Loans: Opportunity as Rates Rise
Where to find yield without duration when inflation expectations and nominal long rates are on the rise.
Non-IG News: Leisure & Entertainment Sector Update
(3:27) Non-IG Leisure and Entertainment Sectors Update
Early-Cycle Conditions Still Support Credit
Why the run-up in rates has troubled equity markets more than credit, and why we think that is poised to continue.
The Workhorse for 5G
(20:08) With society continuing to rapidly rely more and more on the Internet of Things, telecom companies have needed to find ways to stay competitive. But what makes that intriguing for investors?
Time to Get Strategic: Emerging Markets Debt as a Core Insurance Portfolio Allocation
We believe emerging markets debt warrants a strategic allocation by insurance companies—but while our own conversations indicate change is coming, holdings analysis suggests insurers are not yet taking advantage of the opportunity.
Toward a Steeper U.S. Yield Curve
A potentially substantial growth and inflation recovery from the second half of this year could put pressure under long-dated yields, and eventually the Fed.
Rates Markets Are Normalizing
It is far too early for taper talk, in our view, but the bias of risk is still toward higher rates to come.
A Tentative Recovery
The arrival of coronavirus vaccines means the economy should eventually get out of its sickbed but, faced with risks on both the upside and the downside, the Asset Allocation Committee thinks investors should take things steady.
Biden, Taxes and Your Portfolio
Higher personal taxation under a Biden administration could strengthen the case for municipal bonds and tax-managed equity strategies.
Inflation Risk Reemerges
Even as central banks hold in place, recovery amid currently easy monetary policy could bring renewed pricing pressures.
Non-IG News: Earnings Trends in Non-IG Credit
(3:47) During the early stages of the pandemic, most market participants and company managements were very concerned about the impact from mandated shutdowns and shelter-in-place orders on company revenues and bottom line results.
Solving for 2021: An Inside Look
(16:34) As 2020 comes to a close, we reflect on the volatile year we have had and look forward to the year ahead, as detailed in our annual investment outlook, Solving for 2021.
Municipal Market Views
(3:58) Jamie Iselin, Head of Municipal Fixed Income, discusses the effects of stimulus on the municipal bond markets and their behavior given the ongoing debate in Washington.
China Credits: Default Outlook From an Onshore Perspective
Changing government policy could impact default levels in 2021.
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