Fixed Income Investment Strategy — August 2025
August 27, 2025 — Fixed Income Investment Strategy provides an overview of Sage’s market outlook and sector positioning.
Market Outlook
- Dovish Fed Signals Support Rate Cuts: Powell’s Jackson Hole remarks emphasized labor market concerns over inflation, reinforcing expectations for a September rate cut and additional easing, which has led to lower short-term rates and steeper yield curves.
- Mixed Economic Signals Create Uncertainty: While weakening labor markets and slowing activity suggest easing ahead, inflation risks and Fed independence concerns could keep long-term yields elevated; worst-case scenarios like inflation surprises or liquidity shocks remain key risks.
- Portfolio Strategy Focuses on Yield and Resilience: Our investment approach emphasizes overweighting spread sectors, modest duration extension, and targeting resilient, policy-supported areas like MBS and bank debt, with a focus on intermediate maturities and balanced credit risk.
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