2023 was supposed to be the year of traditional fixed income. Many market participants expected a U.S. recession, rates would fall and traditional fixed income would outperform riskier credit. However, as is often the case in financial markets, when many predictions align, expectations are seldom realized. Instead 2023 was a year in which growth persisted, driven by a strong consumer; Treasury rates rose as the Federal Reserve hiked the target federal funds rate (FFR) to its highest level since 2007; and risk-taking was rewarded.
