The growing gap between government spending and tax revenue has created a significant challenge for debt markets. Persistent deficits require increased borrowing, adding to the national debt and driving a flood of new Treasury issuance.
This influx of supply pushes yields higher, eroding the value of existing bonds and increasing the cost of debt. The reinstatement of the debt ceiling in early 2025 adds another layer of risk, with potential gridlock threatening market volatility.
These factors collectively challenge the traditionally “safe” status of fixed-income investments. At Redwood, we focus on managing these risks by staying disciplined, prioritizing flexibility, and ensuring portfolios are positioned to navigate the challenges of rising yields and economic uncertainty.
The Deficit Dilemma
- We believe the preservation of capital is key to consistent, long-term investment success.
- Our investment approach is grounded in economic theory and backed by quantitative analysis.
- Managing drawdown risk is a pillar from which we build our portfolios.
60-Second Breakdown: December 9, 2024
Redwood Senior Analyst Michael C. Sasaki, CFA® discusses recent market performance and explains this week’s chart.
Best Invest Advise EVER!
Bryan Bourgeois, CEO/Founder of Shorebreak Capital, discusses why 90% of investors fail and how to avoid these common investment mistakes with Conner Small, Partner at Redwood Investment Management, Shorebreak Capital’s dedicated asset manager.
