Fixed Income Conversation Corner with Mike Cudzil (PIMCO) and Leslie Falconio (UBS CIO)

High starting yields give fixed income a large cushion against further rate rises, making both guests overweight duration now.

• Attractive starting yields: Mike Cudzil notes high-quality fixed income portfolios can yield 6-8% today, with 94% correlation between starting book yields and five-year forward returns.
• Fed path uncertain: Both guests expected the September 25bp hike; Falconio sees another hike or two possible, with cuts potentially resuming late 2027 as inflation falls below 2% by mid-2027.

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