Why the Bond Market's Growth Outlook Is Influencing Pricing

In November, it became evident that the uncertainty surrounding the direction of the U.S. market was a significant theme. With the impending change in leadership next year, a portion of the market's uncertainty centered around where the Federal Reserve's rate cuts would land. Investors generally maintained their confidence in the Federal Reserve's rate-cutting actions, yet the frequency and intensity of these cuts were subject to speculation.

Relief from Fed News

The news from the Fed did not do much to ease these concerns. Federal Reserve Governor Lisa Cook recently indicated that the scheduling of future rate cuts would be based on forthcoming data. This led some to question whether the Fed would indeed make a cut in December.

Managing Bond Investments

New inquiries about the Fed's rate-cutting cycle added complexity to managing bond investments. However, there were valid reasons to remain optimistic. In the November edition of Tactical Take, Jack Janasiewicz, CFA, Portfolio Manager and Lead Portfolio Strategist at Natixis, along with Brian Hess, Vice President and Investment Strategist at Natixis, discussed the current outlook for the bond market. During the discussion, Janasiewicz analyzed how higher real yields contributed to nominal solid yields."It shows that the bond market is factoring in better growth prospects," Janasiewicz added. "If inflation expectations were the main driver pushing up nominal yields, we would be more concerned. But that's not the case here."Investors could have more confidence in their fixed income strategies as the bond market leaned towards the growth narrative. Natixis offered a range of mutual funds to meet different investment needs.

Loomis Sayles Core Plus Bond Fund

One such option is the Loomis Sayles Core Plus Bond Fund (NERYX). This fund provides a core selection of corporate and U.S. government bonds, with a focus on high quality. It goes beyond its benchmark to identify unique fixed income assets to enhance yields and long-term returns.The mutual fund has an intermediate portfolio duration of approximately 10 years or less. As of November 22nd, 2024, it had a 30-day SEC yield of 4.65%.For more news, information, and analysis, visit the Portfolio Construction Channel.