Where does fixed income stand in April 2023?

Fixed income markets have changed a lot from a month ago. Last month the general discussion centred around how high the Fed would hike rates and where the terminal rate would end up. Federal Reserve Chair Jay Powell said that price pressures remained elevated, and that Fed policy needed to remain aggressive. The fixed income market started contemplating a 50 basis point rate hike in March versus the 25 figure it had previously coalesced around. Then Silicon Valley Bank failed, followed by Signature Bank and Credit Suisse. The outlook for interest rates and the economy changed very quickly. Fed rate hike expectations were revised downward and were proven correct. The US 10-year Treasury yield currently sits at 3.42%, down from 4.06% a month ago1.
This month, we speak to Invesco Portfolio Managers Matt Brill and Todd Schomberg about how they are thinking about fixed income markets in the aftermath of the recent banking sector upheaval. They take stock of where interest rates are headed, their outlook for inflation and the role of Fed policy.
1 Source: Bloomberg, LP. Data as of 4/11/2023 showing Treasury yields as of 4/10/2023 and 3/2/2023.