Treasury yields (^TYX, ^TNX, ^FVX) are trading lower as markets begin October, with investors eagerly anticipating new jobs data on Friday. This data could provide deeper insights into the Federal Reserve's potential rate cut trajectory. Manulife Investment Management Senior Portfolio Manager and Co-Head of U.S. Core and Core-Plus Fixed Income, Jeff Given joins Morning Brief to discuss his market outlook, particularly focusing on bonds.

Given observes that markets are shifting based on "what people expect from the Federal Reserve," noting that volatility will likely continue as rate cut expectations fluctuate. Regarding the current bond market dynamics, Given predicts the yield curve steepening will persist. He explains that historically, at the end of a Fed cutting cycle, recession fears often rise. Although he doesn't anticipate a recession materializing now, he finds the current bond market situation "not that surprising."

When it comes to fixed-income investing, Given emphasizes it's not just about duration, but "taking the right type of duration." He advises looking beyond the typical yield curve, stating, "I think from a curve perspective, that 4-to-8 year part of the curve makes a ton of sense. You can get some added return there."

Discussing his outlook on Fed cuts, Given considers back-to-back 50 basis point cuts "a little bit much." Instead, he thinks a 25 basis point cut is more likely over the next two meetings.

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This post was written by Angel Smith