July 06, 2023
The Macquarie Fixed Income Strategic Forum
One of the challenges with investment management is balancing the short term noise of financial
markets with a longer term assessment of the investment and economic landscape. The Macquarie
Income Strategic Forum is held three times a year, comprising more than 130 investment professionals,
and operates to establish our medium term views and strategic portfolio positions.
Key takeaways from the the latest forum
State of play
The impact of higher rates and monetary tightening is already starting to be felt. As the liquidity
tide recedes, we are wary of what could break next. The risk of further credit tightening shouldn’t
Consensus versus financial markets
Economic consensus anticipates a recession, but financial markets (valuations) are not yet fully pricing this in.
What could counter the “consensus”
There are several factors that may explain why markets’ “delayed reaction” continues to exist: the
possibility of a central bank pivot, offsetting fiscal policy, the opaque role and proliferation of private
credit, and the promise of the artificial intelligence (AI) revolution – although we remain wary of the
likely misplaced optimism.
Everything and all at once?
As the effects of the long and variable lags of monetary policy and credit tightening as well as liquidity
contraction start to eventually materialise, we ponder whether a recession and its impact on financial
markets will, as they often do, hit everything, everywhere, and all at once.