The first quarter of 2022 saw negative returns across the U.S. bond market as persistently rising inflation surprised central bankers and bond investors alike. Dramatically rising interest rates have focused bondholders’ attention on fixed-income investments – even provoking some to abandon the asset class entirely.
In this episode of Market Currents, Northern Trust’s Katie Nixon welcomes Peter Mladina, director of portfolio research for Wealth Management, to explore the purpose of fixed-income securities in volatile and uncertain conditions, which seem likely to shape the investing landscape for the foreseeable future.
The unique role of safer, risk-control assets in a portfolio and the foundational function they hold alongside return-seeking risk assets.
How investors can structure a portfolio to secure high-priority goals by matching the maturity of risk-control assets with expected liquidity needs.
Northern Trust’s Portfolio Reserve and how it is customized to secure a specified number of years of lifestyle spending.
Interest-rate risk and its headline role among the types of risk that fixed-income investors are exposed to, and a the way risk-control assets hedges them all through periods of volatility and unpredictability.
Peter Mladina is responsible for applying research, tools and methods that support asset allocation, portfolio construction, investment selection and best practices in portfolio management to the wealth management investment process.
Peter is an Adjunct Professor of Economics at UCLA, where he teaches applied finance for the Master of Applied Economics program. His research on asset allocation and portfolio construction has been published in peer-reviewed journals and he is a co-author of the CFA Institute’s revised Level III asset allocation curriculum. He received a Bachelor of Arts degree in Economics from UCLA and Master of Business Administration degree from Edinburgh Business School.
As economic reopening continues and supply-demand imbalances lead to price increases, investors are understandably fixated on the future path of interest rates — a key driver of future growth and returns. But in this particularly unusual period of economic history, what will the Fed do?
Many believe higher inflation is transitory and that the Fed should wait it out. Others argue that it should take action now to get ahead of a potential problem in the future.
In this episode, Colin Robertson, Northern Trust Asset Management’s head of fixed income, weighs in on this debate. To do so, he provides historical context, interprets Fedspeak and illuminates the economic and policy dynamics that will drive interest rates going forward.
The drivers of low interest rates since the financial crisis
Noise versus signal related to predicting future monetary policy
The current and most likely future shape of the yield curve
Northern Trust’s outlook for total bond returns
The merits of owning bond funds versus individual bonds
About Our Guest:
Colin Robertson is an executive vice president and head of fixed income for Northern Trust Asset Management. This role includes overseeing fixed income investments for individual and institutional investment management accounts at Northern Trust, Northern Funds and Northern Institutional Funds. Through his leadership managing interest-rate-sensitive and credit-sensitive fixed income portfolios, Northern Trust has built a world-class fixed income team, investment process and products.
As the U.S. economy continues to reopen amid relaxed COVID-19 mitigation measures, pent-up demand is outstripping supply in many cases. One acute example is in the semiconductor chip industry, which provides “the brain” inside a wide range of products that power our modern lives, including smartphones, cars and even washing machines.
In this episode, Northern Trust’s Katie Nixon is joined by Senior Technology Analyst Deborah Koch to sort through this important topic and answer some key questions: How long will the global chip shortage last? What consequences could it have on inflation and the economy? What regulatory response will ensue?
An overview of the semiconductor industry and its role in the technology ecosystem
An estimate of how long it will take to fix the supply-demand mismatch
Corporate and government responses to the strategic issues laid bare by the shortage
The long-term outlook for the chip industry as companies pursue digital transformations
Deborah Koch is a senior equity research analyst at Northern Trust focused on the technology sector. With more than 30 years of experience, she has built a track record of leveraging forward-thinking vision to identify and help clients benefit from market shifts in the technology sector. Before joining Northern Trust, Deborah held several senior analyst and portfolio management roles at well-known asset managers. She is a CFA® charterholder.
Concerns about inflation have filled financial headlines recently as U.S. consumers reemerge from their homes and take note of higher prices and supply shortages in certain areas of the economy. But will higher inflation last? Or will it quickly revert back to more modest levels seen in recent decades?
In this episode, Northern Trust’s Katie Nixon is joined by Chief Economist Carl Tannenbaum to sort through this important topic, which has significant implications for the economy, markets and investors’ portfolios.
What’s at stake when it comes to inflation — why containing inflation is important in the first place
The two broad categories of inflationary forces: cyclical and secular
The drivers of recent spikes in consumer and producer prices
Why housing market inflation bears watching over the coming months
Northern Trust’s near- and longer-term outlook for inflation
Carl Tannenbaum is a chief economist at Northern Trust. In this role, Carl briefs clients and colleagues on the economy and business conditions, prepares the bank’s official economic outlook and participates in forecast surveys. He is a member of Northern Trust’s investment policy committee, capital committee and asset/liability management committee. Prior to working at Northern Trust, Carl spent four years leading the Federal Reserve’s risk section and was deeply involved in the central bank’s response to the 2008 financial crisis.