In May 2013, KCS produced a Fireside Chat on the state of U.S. fixed income.  We are re-publishing it today, as it is still very much relevant, especially our thoughts regarding the primary sources of inflation.

We were very much correct in 2013 when we argued that U.S. rates would continue to decline, and we still believe today that the U.S. economy’s modest growth profile and global geopolitical risk will temper U.S. interest rate increases.

We look forward to hearing from you, especially U.S. public fund and multi-employer pension sponsors, who have positioned their portfolios for significant rate rises. Asset allocation should be driven by the funded status of a DB plan, and not the return on asset assumption. But, that is not the common practice among asset consultants.  We are here to change that antiquated thinking.