utility-drawer__close
0
Add funds
Fund 1
Fund 2
Fund 3
Fund 4
TOOLS
The Morningstar Fund Compare tool quickly evaluates different funds against one another. In addition to Nuveen funds, add any MF, CEF or ETF available from Morningstar. Important information and disclosures are included after you click Generate Report. Please ensure to enable pop-ups in your browser.
The Morningstar Portfolio Review tool compares and analyzes your portfolio holdings. In addition to Nuveen funds, add any MF, CEF or ETF available from Morningstar. Important information and disclosures are included after you click Generate Report. Please ensure to enable pop-ups in your browser.
utility-drawer__mobile-restriction Tools are currently unavailable for use on mobile. Please visit the desktop site.
fund compare tool image
Fund Compare
Quickly evaluate different MFs, CEFs and ETFs against one another
portfolio review tool image
Portfolio Review
Generate a detailed analysis of your portfolio holdings including MFs, CEFs and ETFs
plan profit calculator image
Plan Profit (k)alculator
A plan profitability analysis may reveal a more accurate business financial picture
Image of Municipal bond investing ladder tool
Municipal Bond Ladder Tool
Learn how a laddered portfolio may perform in rising rate environments
Powered by Morning star
Confirm your location and role
location select
language select
Weekly CIO Commentary

How much pain are asset classes pricing in?

Saira Malik
Chief Investment Officer
Saira Malik, Chief Investment Officer

Bottom line up top

[Like what you’re reading? Sign up here for Nuveen’s weekly market insights to receive content like this delivered to your inbox every Monday.]

Equity markets are likely too bearish, and we’re watching credit spreads for signs that bond investors are increasing their recession expectations as well.

CIO weekly commentary chart 1
CIO weekly commentary chart 2
CIO commentary chart
We believe a soft landing or a mild recession are more likely outcomes than either our best case or worst case scenarios.

Portfolio considerations

Our best case (Goldilocks) scenario entails inflation moderating, GDP growth proving resilient and the Fed pausing on raising rates when the coffee is neither too hot nor too cold. We think the odds of this optimistic view coming to fruition are small. At the other end of the spectrum, our worst case scenario is a hard recession, which we also think is unlikely. Instead of these extremes, our expectations hover between the soft landing and mild recession scenarios.

In a soft landing, inflation moderates, GDP growth is positive and the Fed hikes to expectations (i.e., tightening is priced into markets). The employment situation weakens slightly but remains strong. In this scenario, we would have a preference for growth stocks. Within fixed income, we would favor up-in-quality credit, including higher-quality high yield, where current yields of 6.3% cushion against both spread widening and rising rates. Taxable investors could take advantage of attractive entry points for municipals. We would not recommend adding interest rate sensitivity given lower-but-still-high inflation and a resolute Fed.

In a mild recession, the Fed may have been successful in combating inflation, but at the expense of economic expansion (i.e., GDP growth is negative). In this scenario, going into a recession cyclical stocks may lose their premium. Within equities, we would therefore prefer a blend of dividend growth stocks and value equities. The trickier call is finding the appropriate level of rates duration: holding duration while the Fed continues hiking could be problematic, but it may hedge growth risk if the economy is actually in a recession. Additionally, the attractive income offered by credit could help offset the effects of spread widening in a mild recession. Here, we would emphasize investment grade corporate and short- and intermediate-duration municipals.

Nuveen’s Global Investment Committee (GIC) brings together the most senior investors from across our platform of core and specialist capabilities, including all public and private markets.

Regular meetings of the GIC lead to published outlooks that offer:

Related articles
Investment Outlook CIO commentary archive
Access previous issues of Saira Malik’s weekly CIO commentary on strategy and portfolio construction.
Weekly Fixed Income Commentary Treasury yields decline as growth concerns continue
U.S. Treasury yields fell again last week, supporting core fixed income returns.
Investment Outlook A steeper and more perilous climb for the Fed
Brian Nick discusses the March Fed meeting and offers Nuveen's outlook on a steeper and more perilous climb for the Fed.

Endnotes

Sources

All market and economic data from Bloomberg, FactSet and Morningstar.

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature.

Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Past performance is no guarantee of future results. Investing involves risk; principal loss is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index.

A word on risk 

All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Equity investing involves risk. Investments are also subject to political, currency and regulatory risks. These risks may be magnified in emerging markets. Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

Nuveen provides investment advisory services through its investment specialists.

You are about to access our website for visitors outside of the United States.

You are about to access our website for Nuveen Global Cities REIT

You are leaving the Nuveen website.

You are leaving the Nuveen website and going to the website of the MI 529 Advisor Plan, distributed by Nuveen Securities, LLC.

The Nuveen website for institutional investors is available for you.

You are about to access our website for visitors outside of the United States.

Contact us
Contact us
Back to Top