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Strategic Income Opportunities Fund Monthly Insight

Day of the dove

Aug 23, 2019

This is what we love to do: find the best value in the world, build a balanced portfolio, seek consistent returns.

– Rick Rieder, CIO and Co-Head of Global Fixed Income

The Fed swoops in to support the economy and markets.

For the first time in 11 years, the Federal Reserve cut rates on July 31 by 0.25%, bringing the federal funds rate range to 2.00-2.25%. While a rate cut was widely expected, risk-asset markets moved moderately lower following the Fed’s press conference as the forward plan for rate moves became more questionable. We think investors should take the Fed at its word at this point — future rate decisions will be dependent on domestic and global economic conditions, and the Fed will provide more policy accommodation as necessary from this point forward.

Additionally, the Fed announced that it would curtail its balance sheet reduction program in August. This, too, should help support markets and the economy as the gradual reducing of the Fed’s aggregate holdings has had the effect of diminishing global liquidity, which had become uncomfortably tight in the fourth quarter of last year before recovering modestly. Maintaining the size of the balance sheet from this point forward should allow for further recovery in the world’s monetary flows, and should help keep the U.S. dollar in check as its value is an important influencer of global economic conditions.

In the BlackRock Strategic Income Opportunities Fund, we’ve continued to increase overall duration (sensitivity to interest rate movements), ending the month of July at the higher end of the fund’s historical range. It is our view that the Fed’s increasingly accommodative stance and synchronized slower global growth along with continued trade-related uncertainties are likely to continue putting downward pressure on U.S. interest rates.

View fund commentary

Bob Miller
Head of U.S. Multi-Sector Fixed Income
Bob Miller, Managing Director, is head of the U.S. Multi-Sector Fixed Income team within BlackRock's Global Fixed Income group and a member of the Global Fixed Income ...
Rick Rieder
Chief Investment Officer and Co-Head of Global Fixed Income
Rick Rieder, Managing Director, is BlackRock's Global Chief Investment Officer of Fixed Income, and Co-head of BlackRock's Global Fixed Income platform, a member of ...
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