Sell-off in Bond Markets

In October, investors pulled a net $14.2 billion from taxable bond funds, the worst month since December 2015, Morningstar Inc. estimated. Then in the first two weeks of November, they withdrew another $7 billion.

Here are the key advice of the bond gurus:

1. Mark Kiesel | Chief Investment Officer for Credit, PIMCO – On a scale of one to 10, a lot of assets are twos and threes — not attractive, he said. Potential opportunities are emerging in select interest-rate sensitive U.S. areas, such as energy and in the global consumer sector. “I’ll let you know when I start to see some 7s or 8s,” he wrote.
2. Michael Buchanan | Deputy Chief Investment Officer, Western Asset Management Co – Prices of investment-grade credit have fallen so far that there are pockets of value, especially for debt maturing within five years, he said. Banks and financials typically benefit from rising rates.
3. Scott Minerd | Chief Investment Officer, Guggenheim Partners Investment Management – Move up in credit quality, to A from BBB, while spreads are relatively narrow.
4. Tad Rivelle | Chief Investment Officer for Fixed Income, TCW Group Inc – The cycle is ending, so embrace the “anchor to windward” approach, he said. If you get defensive, opportunities will come.
5. Michael Hasenstab | Chief Investment Officer for Global Macro, Franklin Resources Inc – Local-currency emerging market debt shows the highest level of undervaluation across global fixed-income markets, he said.
6. Dan Fuss | Vice Chairman, Loomis Sayles & Co – There are some potential opportunities now in older — not newly issued — investment-grade and high-yield debt. But, in dollar terms, they are tiny, he said.

Table below shows performance of the respective bond manager: 

Reference

Bloomberg, John Gittelsohn, 2018-11-24, “What Bond Gurus Are Saying About the Market Sell-Off”