Impact Blog

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Vishal Khanduja, CFA, Calvert Fixed Income Portfolio Manager

      Boston - We came into 2018 believing the market was underpricing Federal Reserve rate hikes, but the rise in interest rates so far this year suggests that sentiment could be changing.

      This year, we believe investors will see the normal course of the cycle play out with stronger economic growth and a pickup in inflation that will push the Fed and other central banks to pull back on their accommodative monetary stance. The Fed is signaling multiple rate hikes in 2018 and is on a path to reduce its balance sheet over the next five years.

      (Tap or click the image below to view the video.)

      Blog Image Vishal Khanduja Feb 8

      We could be seeing a transition in fixed-income markets. What's changing?

      Fixed-income markets had a great 2017 as credit spreads reached their post-crisis tights. Risk appetites were fueled by the continuation of global central bank liquidity. In other words, ultra-low rates and increasing central bank balance sheets helped suppress volatility and boost risk appetite. Synchronized global growth and benign inflation were additional tailwinds.

      However, the trends we saw in 2017 could be shifting. Against this backdrop, we continue to believe a more defensive posture is warranted. We think this more defensive stance may benefit investor portfolio returns if, as we expect, the global monetary tightening further challenges expensive valuations.