Investors should look for cost-effective ways to increase duration as central banks attempt to embark on their first meaningful rate rises, TCW Group’s Laird Landmann has said.
Landmann, who oversees $175.6 billion in assets, told Citywire USA's sister title Citywire Selector that the Federal Reserve would remain cautious in its ambitions but bond buyers could not afford to be complacent.
‘I think this is going to be a very interesting part of the cycle, with the exit strategy, to see if the Fed actually follows through. We are going to see the Fed very reluctant to shake up the markets and create volatility. We don’t think they are going to go too far, too fast.’
‘As rates rise we see it as an opportunity to add bonds at cheaper [prices] and we will cross average our duration a little higher across our products. However, we don’t see rates rising too fast as there is too much leverage in the system to allow for a 150-200 bps rise. Anything that gets us a 2.5-3% rise is probably about the maximum we can have in this cycle.’
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