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Video: Where to find opportunity and value in bonds in 2019

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The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Kathleen C. Gaffney, CFA, Director of Diversified Fixed Income, Eaton Vance Management

      Boston - Fixed-income investors face many challenges in 2019, and one of the biggest is that rising interest rates may create a real headwind. Traditional "safe" areas such as Treasurys may not provide a haven in this new environment for bonds.

      Yet personally, I'm optimistic about 2019 for fixed income, for two reasons. First, I think the economy is doing just fine, and that is going to allow the Federal Reserve to keep moving interest rates up. And as interest rates move higher, it's going to create some volatility in the markets as bonds recalibrate for a new level of rates. I believe that will return value to the credit markets, and create opportunities for investors.

      (Tap or click the image below to view the video.)

      Blog Image Gaffney 19 Outlook Vid Jan 8

      Right now there isn't a whole lot of value in any of the fixed-income markets. I see the best opportunities as holding cash and looking far afield from the U.S. I think emerging markets will be the best source of return for bond holders in 2019.

      Overall, we are moving from markets that are driven by monetary policy and the central banks to fiscal policy. That means politicians are going to be driving the markets. That's a big change for most investors.