Articles by Chun Wang, CFA, PRM Director of Multi-Asset Strategies

The range-bound interest rate action provides a friendly environment to earn the carry, through moderate duration and high grade credit exposure.

Our data shows the traditional Phillips Curve relationship between the unemployment rate and wage inflation still holds.

The latest CPI numbers missed expectations but we consider it a passable reading.

The proposed corporate tax cut and the elimination of interest deduction are likely to reduce Corporate bond issuance while demand should remain strong.

We believe the “Goldilocks” environment is still intact. Earn the carry.

Overall, the impact of balance sheet reduction on interest rates is weak, at best. Inflation is a much bigger longer-term driver of interest rates.

The mini bond market sell-off in September was fueled by a string of positive developments, which should support the case for further upside in the Economic Surprise Index in the fourth quarter.

While still too early to call an upturn in inflation, we believe at least expectations are perhaps low enough to make the odds in favor of upside surprises in the near term. We don’t think one small beat on the CPI is likely to turn the Fed more hawkish at the upcoming September FOMC meeting.

Corporate leverage is likely to plateau in the second half of the year, helped by a much improved Energy sector.

With the “Goldilocks” scenario still intact, we believe earning the carry is the right approach and high grade credit fits the bill.

If we look beyond the daily noise from North Korea, the global macro picture still fits our “Goldilocks” view pretty well.

The CPI numbers have disappointed five months in a row. The real bad news for inflation hawks is that the weakness in core CPI is broad-based. There is hope for inflation to stem its recent weakening trend soon as the Chinese CPI has already stabilized and started to turn up.

Corporate issuance is likely to decelerate due to slower M&A activity in the second half.

With neither inflation nor recession an imminent threat, the “Goldilocks” scenario remains intact. We continue to view high grade credit favorably within the fixed income space.

Most risk markets have tracked their 2017 time cycle patterns well, but what really stands out is the risk of an autumn correction across all these markets. Caution is warranted going forward.

The U.S. 10-year yield has been stuck in a tight range. Without new major catalysts, we expect the 10-year rate to be collared in two ranges, first 215-240 and, if this is broken, the wider range of 200-260, which is more significant and much harder to break.

“Lower Risk” signal closed out the “Higher Risk” signal generated five months ago. We’re encouraged by the resilience in risky assets during the oil sell-off and the late surge in global bond yields. We’ve been favorable toward high-grade credit and maintain this view within the fixed income space.

“Lower Risk” signal closed out the “Higher Risk” signal generated five months ago. We’re encouraged by the resilience in risky assets during the oil sell-off and the late surge in global bond yields. We’ve been favorable toward high-grade credit and maintain this view within the fixed income space.

Despite the late reversal in rates and the yield curve, the flattening trend of the yield curve remains intact. The fact that longer-term bond yields have fallen while the Fed is raising rates brings back memories of the “bond conundrum” episode during 2004-2006.

The CPI numbers have disappointed three months in a row. Weak commodity prices do not inspire higher inflation expectations. The global scope of inflation deceleration adds more weight to the recent soft readings. However, lower bond yields relative to nominal growth rate is inflationary and buffers the impact of weak inflation and rate hikes.