Markets performed well in Q1 2023 despite economic threats. Yields dropped significantly during March after the fallout from Silicon Valley Bank going under. This provided a boost to growth stocks as well as fixed income. Inflation cooled slightly during the quarter, but the Fed continued to make it clear that interest rates will most likely stay at current or increased levels for longer than what the market has projected. The labor market remained tight as over 1m jobs were added to the U.S economy so far this year, however, jobless claims continued to steadily increase.

Pathstone’s “Meet the Manager” interview series features some of the passionate and committed asset managers with whom we have developed strong relationships. Our goal is to share the depth and breadth of expertise and collaboration that goes into our investment process.

This installment features Libby Cantrill, Managing Director, Public Policy, and Jerry Woytash, Vice President and Portfolio Manager, of fixed income asset manager PIMCO. PIMCO has been focused on active management in fixed income for more than 50 years. Pathstone uses the PIMCO Income Fund (PIMIX) as a core part of our credit risk alternatives asset class, aiming to generate attractive risk-adjusted returns for clients across a variety of fixed income asset classes.

In a discussion with Chris Martin, Director in Pathstone’s Investment Research team, Libby and Jerry provide their take on the current debt ceiling debate and how it might affect the market for Treasuries and other short-term instruments. Their dialogue builds upon Pathstone’s recently published analysis, Debt Ceiling Debate 2023: Our Assessment.

Please note, this interview has been edited for length.

February was a tough month for broad market performance. Inflation for January came in higher than expected and markets are finally buying into the Fed’s narrative that interest rates will and can be at increased levels for longer than was once thought. Treasury yields rose considerably as did inflation expectations on the news.