Insights & Education

While understanding economic regimes and mastering fundamental portfolio construction techniques provide the foundation for successful fixed income investing, the most challenging and potentially rewarding aspects of bond portfolio management involve navigating market uncertainty, managing liquidity effectively, and positioning portfolios for regime transitions.

The third quarter of 2025 has proven to be a pivotal period for fixed income markets as the Federal Reserve finally ended its nine-month pause and began cutting rates in September.

Understanding economic regimes provides the conceptual foundation for modern fixed income investing, but translating that knowledge into actionable portfolio strategies requires mastering the fundamental building blocks of bond portfolio construction. The most sophisticated economic analysis becomes meaningless without the ability to implement those insights through deliberate decisions about duration, credit quality, and sector allocation.

The traditional approach to fixed income investing—buying bonds and holding them to maturity—assumes a level of economic stability that simply doesn't exist in today's markets. From the ultra-low interest rate environment of the past decade to the rapid monetary tightening cycles we've witnessed, each shift has fundamentally altered which fixed income strategies succeed and which create significant headwinds for investors.

Traditional fixed income investing faces an existential challenge. The static allocation models that dominated portfolio construction for decades are becoming obsolete in an era where inflation can surge rapidly, central banks pivot policy overnight, and economic regimes shift with unprecedented frequency.

And just like that, the presidential election did not disappoint in terms of a macro-catalyst.

This morning, the Federal Reserve cut its benchmark rate by a half percentage point in an effort to limit potential economic disruptions.

Due to the growing concern around the coronavirus outbreak (COVID-19) and the panic it is causing across global risk markets.