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Six Things That Drove Fixed-Income Markets Last Month:
  • A softer turn in inflation data: Finally, inflation watchers got to digest some good news, as both CPI and PPI numbers came in softer than survey expectations. CPI month-over-month came in at 0.4% vs. expectations of 0.6%, and the core (ex-food and energy) came in at 0.3% vs. expectations of 0.5%. 
  • Most credit markets rallied, with the bulk of the move following the CPI release.
  • The People’s Bank of China (PBOC) indicated it would reduce its reserve requirement ratio  for commercial banks in a bid to ease credit conditions in the face of renewed lockdowns and weakness in the property sector. 
  • Oil prices continue to decline, which could remove one of the larger risk factors of a stagflationary 2023—but one whose price decline signals lower demand with a slower global economy in the coming year.
  • Korean commercial paper funding rates remain high after the unexpected default of the Legoland Korea theme park. 
  • Japan’s inflation rate came in hotter than expected with October CPI at 3.6% on a year-over-year basis, adding pressure to the Bank of Japan’s (BOJ) yield-curve control (YCC) policy.


What's Keeping Us Up at Night:
  • Developments in Russia/Ukraine keep moving on a knife’s edge
  • Bank of Japan and yield-curve control
  • Olivier Blanchard's 3% inflation target opinion column 
  • The US debt ceiling



Important Risks: Investing involves risk, including the possible loss of principal. •Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. •Investments in high-yield (“junk”) bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. • Municipal securities may be adversely impacted by state/local, political, economic, or market conditions. Investors may be subject to the federal Alternative Minimum Tax as well as state and local income taxes. Capital gains, if any, are taxable. • Foreign investments may be more volatile and less liquid than U.S. investments and are subject to the risk of currency fluctuations and adverse political, economic and regulatory developments. These risks may be greater, and include additional risks, for investments in emerging markets. • Diversification does not ensure a profit or protect against a loss in a declining market. 

The views expressed herein are those of Wellington Management, are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. They should not be construed as research or investment advice nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management or Hartford Funds.

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Insight from our sub-adviser, Wellington Management
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Managing Director at Wellington Management and Fixed-Income Strategist for Hartford Funds

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