Show Notes
With yields at historically attractive levels and the yield curve offering attractive opportunities, fixed income is drawing renewed attention from investors seeking both income and capital preservation. But is the short end of the curve really as appealing as it seems—and what should investors know about the risks and rewards? In this episode, Ayako Lehmann, Head of Webcasts & Video at Julius Baer, is joined by Roman Frey, Head of CIO Office Global Fixed Income and voting member of the Fixed Income Investment Committee. Together, they explore why fixed income deserves a place in every portfolio, the importance of duration, credit risk, and liquidity, and how macroeconomic factors and central bank policy shape the opportunity set. The conversation covers the dynamics of the primary and secondary bond markets, the role of market technicals, and why short-dated bond strategies may offer a compelling alternative to cash and money market funds. Roman also discusses the impact of the Federal Reserve’s evolving communication style under Kevin Warsh, the practicalities of managing strategic cash, and why now may be a particularly attractive time to lock in yields.
(00:00) - Introduction
(01:28) - Is fixed income really boring?
(04:39) - Understanding duration and credit risk
(06:53) - Liquidity and the importance of the primary market
(10:08) - Macroeconomic factors and central bank policy
(12:40) - Market technicals and the impact of supply and demand
(14:03) - Hyperscalers and the shape of new bond issuance
(16:31) - Cash versus bonds—what investors should consider
(20:34) - The Fed’s new communication style and implications for investors
(23:08) - Is short duration the right approach now?
(25:27) - What makes short-dated bond strategies attractive?
(28:28) - Managing short-dated bonds: hold to maturity or switch?
(29:48) - Risk and return trade-offs in short-dated strategies
(32:21) - Investment horizon and the role of strategic cash
(34:51) - Yield curve steepness and the roll-down effect
(36:16) - Is now a good time to invest in bonds?
(38:23) - Closing and legal information
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