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[music] >> Hello, I'm Greg Bonnell and welcome to MoneyTalk Live, brought you by TD Direct Investing. Every day, I'll be joined by guests from across TD, many of whom you'll only see here. We are going to take you through what's moving the markets and answer your questions about investing. Coming up on today show, TD Asset Management Scott Colbourne with his reaction to what we heard from the Fed and how much longer this hiking cycle could last. And in today's WebBroker education segment, Jason Hnatyk will take us through how you can research fixed income assets on the platform. So here's how you get in touch with us. It just email moneytalklive@td.com or you can fill out the viewer response box right under the video player in WebBroker. And before you get all of that, let's get you an update on the markets. Of course, even though we are dealing with the aftermath of what we got from the Fed and what we heard at the press conference afterward, we are still in the thick of earnings season. We are hearing individual names react. Right now, the TSX down a very modest 25 points, little more than 1/10 of a percent. Seeing some weakness in benchmark crude prices south of the border, but we have some oil names to the upside. Let's go through some of the individual names. Spin Master coming out with its latest earnings taking down its sales forecast at of the key holiday. And thathas the name under significant pressure, 35 bucks and change, down almost 13% on Spin Master right now. Hudbay Minerals, last time I checked, even though we see a strong US buck on the tail of the Fed announcement, they are beating expectations and reaffirming their guidance. It got Hudbay up almost 6%. Says the border, lest you cannot on the S&P 500, still in the sake of earnings season, digesting what the Fed had to say. The broader read of the American market down almost a full percent, about 35 points. Check out the tech heavy NASDAQ, down about 1.14%. Qualcomm down 7%, chip sales are slowing for smart phone makers. That's your market update. markets did take some time to try to figure out what fed chair delivered yesterday, but through it all, the major indices are downand some investors think we are not going to see a pivot coming anytime soon. Joining us now what for his take it, Scott Colbourne, managing director of active fixed income at TD Asset Management. What is the take away message from yesterday afternoon? >> Initially, going in, there was hope given when it happened from the Bank of Canada and the RBA and from others that we would see some sort of pivot and when we first saw the announcement, there was an announcement that as had been sort of communicated through news media that the pace of rate hikes isdown but as we got into the press conference and we dug in, the reality has sunk in that Gov. Powell is trying to communicate that thetightening cycle has some way to go, the pace is changing, the duration of that tightening cycle still has some way to go, so very premature in terms of talking about a pivot in which would be supportive. It's dampening, as we've seen yesterday and today, in the broader market. >> Scott, were having a bit of a problem with your microphone there. We're going to try to get that fixed and getback to this discussion about the you said and get even deeper. We are taking your questions for Scott later in the program. email us at moneytalklive@td.com. Philip the viewer response box right under the video player here on WebBroker. I will tell you a bit about what's happening in the world of business and some of our top issues will we get this issue sorted out and get back to that conversation. The average selling price of a Toronto home held steady from September to October as borrowing costs continue to rise. That's according to latest numbers from the Toronto Regional Real Estate Board. While the average price that he did almost $1.1 million, that's still down some 18% from the highsthat put in last February. Just last week, the Bank of Canada indicated it's getting closer to the end of its hiking cycle and it did, course, deliver a smaller than expected 50 basis point rate hike. Suncor's booking a $3.4 billion impairment charge on its Fort Hills oil sand mine. The non-cash charts although oil major record a net loss of more than $600 million in its most recent quarter. That said, on an adjusted basis, Suncor says it earned $2.6 billion in the quarter on soaring energy costs. Nutrien is cutting its full-year profit forecast, telling its investors and now expect lower potash salesvolumes and prices. The crop nutrient giant says customers are carrying higher inventories of potash and have turned cautious in their purchasing decisions. This news comes after Nutrien it more than doubled its profit in most recent quarter, compared to the same it. Last year. And now the main benchmark indices. We are still sorting through earnings,lots of dips in Canadian ones for. We have the TSX Composite Index modestly in negative territory, down about 13 points, about seven takes, nothing too dramatic, 19,263. Check out the S&P 500, we are still getting earnings out of Wall Street as well. A lot of things in the mix right now for investors. 3725, we are 34 points down, almost a full percent. Of course, markets to try to take some time to figure what we exactly got from said to chair Jerome Powell yesterday afternoon. We are now sadly to the downside in the wake of all that. Investors, some of them out there thinking there's no lightning up anytime soon. Here's Scott Colbourne, managing director of active fixed income at TD Asset Management. Let's try to run down what happened yesterday afternoon. We seem to have come to a bit of a market consensus from what we got from Jerome Powell. What was it? >> The statement was basically clear. Rates still have to go up higher but the acknowledgement that monetary policy works with legs and there is a cumulative effect on the economy of those legs. So that to the markets initial reaction was sort of a positive reaction because we had hoped for some sort of acknowledgement, a pit or a slower pace of rate hikes. The press conference with Gov. Powell sort of dampen everything. he framed in three ways. First, he said we had to look at pace. we acknowledge that pace is very rapid and that will change going forward. We have seen at another bank. The Bank of Canada, as you just mentioned. The pace is going to slow for sure. He is focusing on the destination. In our world, it's called terminal rate. Where is that right? You acknowledge that since September, when we last got an update on the forecast, it is higher what was then, which was about around 1/2 or three quarters of a percent. So we are going to have a higher terminal rate and we are not exactly sure and so that dampened the market expectation and certainly the expectation andthe tightening cycle will be longer and the combination of the letter to, the higher terminal rate and the duration of that dampened markets. Bonds move higher, flatten the curve, shorter rates moved higher than long rates and that had a dampening rate on the market. >>it's interesting, he said the statement, the statement did give you that little bit of indication, like for the Bank of Canada, we've done a lot and maybe we need to reflect on what we have done. But then, as you said during the press conference, it felt like the Jerome Powell… You went into this event thinking he's going to tell us not to worry, but he was very stern. If there was one word that stood out to me, it was that he was on a stern path. >> Historically, the mistake has beenbeing premature in pausing cutting. History lesson is don't be premature on that. If anything, he is going to air on the side of over tighteningrather than under tightening it. So that is definitely a stern message. >> So that takes is probably through the end of this year and into 2023. He talked about the endpoint and then the duration of hanging around that endpoint. As you said, chair Powell indicated we did get a fresh message this time around. Seems to be a hint that when we finally end up at that place we want to be, it might be higher than previously thought and we might stay there for a long time. What is that due to markets? >> From a bond investor's point of view, it means that we continue to have pressure on the front end of the yield curve and short and rates going up more than long and rates. That's a flattening of the curve, all retire. We are going to continue to see bond yields higher and the destination… Now, we have a lot of speculation. Where does the Fed funds rate go? Now it's at 375 to 4%. Is the destination 5%? Is it 5 1/4? Is it 5 1/2%? So I think it's probably five, 5 1/4 is where I would land on but we have seen the domestic US economy, particularly the consumer, the jobs market remained resilient. So we are going to start to… We are in a data dependent world. They definitely emphasize that and we are going to get new data tomorrow. On Friday. > It's a buckle up kind of thing. >> Yeah. It's definitely the pace of jobs growth has slowed but it's still a solid… The Fed acknowledge that yesterday, things haven't really ratcheted down on the job site and it's too strong to even begin the pivot process. So we will see that. We will see CPI next week. There is definitely a data dependency element to this but I think we have some way to go. >> You mentioned the fact that Jerome Powell also said the labour market is still strong and tight. When it comes to inflation, are getting any sense at that central banks are starting to win this fight,perhaps not even winning about putting a dent in it? > Yeah. When we first started to discuss the overshoot on inflation, it was COVID shocks, it was supply chains, it was inflation and energy shocks. And that is definitely, we are deftly going to see a turn on that side. We are seeing the evidence that the rate of increase in headline CPI's going down. So all of that is working in favour of a lower inflation next year. And when you look into the bond market details, definitely shows that inflation is going down, headline inflation is closer to 3%in the second, third quarter of next year. That being said, the core, the labour market, the sticky elements of core inflation is the challenge so to the central bank's point, particularly the Fed, it has some way to, more ways to reduce demand here, to calibrate. >> Before he got off the central bank discussion, the Fed is very important, not the only central bank in the world. We heard from the UK central bank. >> They raised it 75 basis points but they push back on how far rates are going to go. I was a bit of a surprise the market in the sense that the governor said look, if we follow its price into the market, the path it's priced into the market, we will see a sustained period of recessionary growth and I think that surprised the market a little bit. But there is definitely you a little room to continue to see rates higher. I think this is the challenge for all central banks. The Bank of Canada acknowledged that, the bank of England technology, we are going into a low growth environment, it's recessionary. How a deeper recession into next year, 2023? That has invocations for bond markets, equity markets, credit markets and not all economies are going to be aligned as we have been over the last year. We are going to start to see that differentiation. >> Great insight and an interesting start to the program. Before you get to your questions for Scott Colbourne, let's take a quick look at the market action. Of course, we have all the central-bank intrigue and earnings season, we have individual stocks reacting to what was shown in the street from recent quarters. Right now, we're pretty much flat on the S&P and TSX index. Down the about five points. The S&P 500, the broader read of the American market, right now it's down to the tune of almost 2/3 of a percent, 22 point deficit from the close yesterday. We are back with Scott Colbourne, take your questions about fixed income. The first one coming in. How do you US dollar denominated fixed income assets compared to Canadian ones? And what I choose one being better? Is it a matter of better or different? >> Is understanding the risks rather than saying ones better or ones worse. Look, there is a difference as we sort of acknowledge, as economy sort of change their direction here, we got lower rates in the bond market here in Canada. The Bank of Canada raised rates less than the Fed, so let's just generalize and say there's about a 75 basis point difference less of the yield, .75% less of a yield in Canadian yield versus the US. That would speak to an advantage in a US dollar assets. It comes with currency risks. To the extent that the Canadian dollar weakens, it's an advantage of being in a US dollar denominated debt. That's an advantage. It's a liquid market. That's great. Another advantage of being in the US market is that it's more diversified. So if you go into the world of investment-grade debt, there is a lot more if you will sectors to invest in on the corporate bond market side. But the domestic side here in Canada, you still have an interesting opportunity to be investing in Canadian investment-grade debt. You don't have to worry about the currency debt. The currency markets can be wild and can have a significant impact on your total return. > It sounds like if you want to be in US denominated fixed income assets, you do have to have probably at least in Outlook for the currency, where the Canadian dollars headed. That's been a tough one this year to because the US dollar has been mowing down everything in its path. >> Yeah, and to this discussion about a pivot, some point down the road, we are going to pivot on the US dollar. It's not for a while, but the pit of it, and that is usually a decline in the US dollar is associated with a trough saying in the global economic growth, the pickup on that is positive for most cyclical currencies, the Canadian dollar. At some point, we are going to be discussing that transition that's going to be happening in the US dollar and US interest rates. >> Let's get to another question now. If your wants to know if you have any thoughts on government debt due to COVID payouts that we saw and the impact of that going forward? I remember governments at the time, borrowing costs were very low. Those costs are not as low as they used to be. >> We also are at the tail end of central banks buying up debt. They are not. We got quantitative tightening going on in the US. The Bank of Canada has done the same. So they are not participating in the buyback of government debt. The same thing happening over in the UK. I think the most important lesson though that was recently imposed upon by the markets of the bond vigilantes of old was the fact that the UK government came in. It was short-lived. The UK government plan of spending without any fiscal anchor, that runaway spending and raising significantly the amount of debt that they needed was punished viciously in the UK market and certainly had an impact on their pension market and so I think that was a warning sign that we can't have runaway spending in absence of some fiscal balance. And we are starting to see, Nazi but here evidence that governments around the worldour hearing the echoes of what happened in the UK. >> Right, and perhaps you will get those echoes as early as this afternoon. Our own government, not quite a mini budget but a fiscal update, and I imagine they heard that wording pretty clearly. If you want to stimulate the economy, I don't think Britain was trying to stimulate the ease the pain for the populacebut it was too broad-based and the markets did not like the sound of it. Do the Trudeau liberals have to be careful with this update today? >> They have to be anchored in terms of reality. I think the message subtly has been received by the federal government that is not going to be spending wildly without any revenue raising effort, under a currying the debt to GDP ratio. >> Let's get to another question now, this one about high yield. What's the outlook for high-yield fixed income right now? Some of these yields can be attractive but there's a reason, right? >> Yeah. We are getting back to attractive yields in the broader markets. Broadly speaking, 9 1/2% in the broad high-yield indexes very attractive and I personally always favoured investing in a high yield over the cycle. It's an asset class that gives you equity like returns with a fraction of the volatility in the broad equity market. That is a plus, but the challenge we are going to be facing as investors whether it's in equities or credit markets is next year, we anticipate a recession. We haven't seen the Bank of Canada say those words. At the Bank of Canada acknowledge that today. In the bank environment, that is a challengefor credit investors. So gotta be very careful. We could see higher yields than the current levels on high-yield, but I think if you take an investing over the cycle approach that once you get over 9%, high-yield is attractive to be invested in and I wouldn't be putting all my chips on the table, but I'd certainly be looking at adding good names and doing your credit homework and I anticipate more headwinds on the credit market next year which, for me, as a bond investor with a longer-term horizon, is a good time to buy credit, when things are dampened and the outlook is more challenge. >> What does that homework entail? If you are actually taking a look at the high-yield space, wondering, the yield itself is attractive but you are saying do your homework. One of the top things were looking for? >> In a general sense, it's sort of the same outlook that you would have on the equity market. We're looking into the financial statements, the balance sheet, and the outlook for cash flows. The difference being for credit investors is that you want your money paid back and you're focusing on the ability of these corporations to refinance the debt that they have. You want to make sure that the management is focused on the debt side of the equation, not to simply equities and equity buybacks and dividends. So that homework has to be done with a slightly different lens as a credit investor and when you go into recession, you're trying to look through the cycle of recession . So can this company manage to the cycle? Are they going to be able to manage the debt payments? what tools do they have at their disposal? How flexible, how is the management acknowledging the challenges going forward? And that is a pretty key thing, especially as you go down credit score. >> Fascinating stuff. At home, always do your own research before you make any investment decision. We are going to get back to your questions for Scott Colbourne on fixed income in a moment's time. A reminder that you can get in touch with us at any time, email moneytalklive@td.com. Delegate to our educational segment of the day. If you are looking to do research on different fixed income opportunities, WebBroker does have tools that can help. Joining us for more now is Jason Hnatyk, client education instructor at TD Direct Investing. Jason, great to see you. Take us through how we can approach investing in fixed income using the plat form. > Thank for having you. Always a pleasure. fixed income can absolutely be an important part of an investors profile, whether or not you are looking for diversification, capital preservation or chasing some yield to generate some pretty cool streams of income and fixed income can be a good part of that. So let's bring it you into WebBroker so I can show you how easy it is to find those investment choices. Much like any other investment class, WebBroker has many different choices for investors that are available. If we are looking to invest directly into one particular bond or fixed income, we can do that by choosing trading from the top of the page and then on the left-hand side, we will just select fixed income. On this particular page, you will be able to see all of the wide assortment of fixed income products that we have available for your choice, whether or not it's different corporate bonds or government bonds at varying degrees of maturity, we even have, as Scott was mentioning, a high-yield bond section here on the left-hand side, lots of toys available for the investor here in the platform. For investors that are looking for diversification and exposure into the fixed income sector itself without needing to buy a particular bond, there is another choice and that might be a fixed income mutual fund, so I will bring you further into the website so that we can see how that may be achieved as well. We can go ahead and choose research from the top of the page, this time under investments we will select, as you would expect, mutual funds. To narrow it the final down, we will go ahead and select the categories tab from the top the page. Many different choices in different sectors that are available on this page. I'm going to focus on the Canadian bond sector, we will see this tab at the top of the page, continue that funnel so we can begin to narrow down the different choices that are available to us. As you can see, there are many different mutual funds sectors that are focused on the Canadian bonds. We have the opportunity to compare their performance across varying degrees of time. Let's go ahead and choose the corporate fixed income select section here just so we can dive a little bit deeper here in this particular section. So once we select that from this page, it's going to then now bring up all of the different funds that are in this particular sector that our investors have the ability to choose from. If you get a description on the right-hand side so we can get an understanding of the the mutual fund's goals and objectives are in the different classifications they need to me to be selected in these areas, and additionally all the funds listed down below, we get the ability to compare their performance over different lengths of time. As well, we get the opportunity to get a sense of what what MorningStar ratings might be applicable to these funds so we canmake an informed choice. >> So research on the platform is at the points where they are looking at individual funds. How did they learn more about them? >> Absolutely, that's important step. We want to peel back the onion, look behind the curtain, whatever metaphor works for you. We want more information. So to start achieving that here, we will use the top fund on the list. You will start by choosing the fund symbol itself and then down at the bottom of this pop up, there is a summary selection. We will go ahead and choose that. On this particular page, there's lots of great information available to us. We are getting the quotes, the nab of the fund displayed at the top of the page, we are getting the investment objectives of the fund, once again, to ensure it is an appropriate investment that lines up with our own risk tolerances. If we continue to scroll down the page, we get to see what the investment minimums needed to achieve a buy-in to the fund, we have a look at the different fees and expenses, the management fee is there, making sure we are not overpaying for the asset, we get a different breakdown of the different asset classes. We are looking at a Canadian bond fund, so it's no surprise that we see a heavily weighted fixed income diversification in this particular fund, but even further beyond that, we do get a chance to see the top 10 holdings that are in this particular fund, so we can make sure that things are diversified, that we are getting exposure to the different fixed income assets or classes that we are expecting from this fund, so lots of information about making a more informed investment decision. >> Interesting stuff as always. Thanks. It Jason Hnatyk, client education instructor at TD Direct Investing. Make sure to check out the learning centre in WebBroker even more educational videos, live interactive master classes and some upcoming webinars. before you act your questions about fixed income for Scott Colbourne, a reminder of how you get in touch with us. Do you have a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind soSend us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com, or you can use the question box of right below the screen here on WebBroker. Just writing your question and to 10. We will see if one of our guests can get you the answer right here at MoneyTalk Live. We are back now is Scott Colbourne, take your questions on fixed income. Let's get back to them. This one just coming in the past couple of minutes off the platform. His stagflation risk back on the table? We have and use that word in a while. What you think? >> Yes is the answer. I think when you think about investing, you have to think about managing the different scenarios and probabilities and I would say that stagflation is an environment of negative growth and inflation and we are in that environment, we are set up for that in 2023. Yes, inflation is coming down, but it's on track to be stickier and more persistent and higher than the targets of central banks. So is the same as the 70s and runaway inflation? No, but it is more persistent and broad based in higher than in the past. I would say that the risk of a recession is higher. Some indicators we've looked at give us 75 to 80% chance of a recession next year. That doesn't speak to how long it will be or how deep it will be, but it is on track, given the change in monetary policy in the absence of fiscal stimulus. So the stagflation in that context is on the table, but as investors, we need to handicap different scenarios going forward. So that's our predominant handicap or scenario next year. But eventually, we will see a change in the broad global economic environment and we will respond to different stimulus as we go along and it will change your outlook. >> You talked about trying to figure out the path ahead. The stagflation one only in the sense that there's a lot of people who either weren't even alive at the time were very young at the time and I would have been in the very young in the 70s camp. How challenging would that be as an environment for investors to navigate? >> It's a very challenging environment and I think the central banks are nodding to that and how they are changing the pace of rate hikes. We got these rapid rate hikes and now we are embarking on a path going forward that's still very highly uncertain. That's why you handicap with different probabilities the outlook and that's what the Fed is doing as well. It is saying, "We are going to increase rates less. We still gotta go higher. History teaches that the stagflation environments in the 70s and 80s that we have to be very cautious and we have to stay the course longer than one has been used to over the last sort of 10 years." And so that is a different environment for investors. It's more volatile. I would describe it as a range trading but the ranges are very big and so it's a challenging environment. We certainly don't… It's not as trending as we've been used to and it's not as friendly and environment to invest in. >> Interesting stuff. Let's get another question of the platform now. What is your view on 5 to 10 year investment grade bonds? >> We've been working in an environment that's beenall driven about interest rate increases. That's been the primary driver of negative returns in the bond market. This year, it sort of been a broad swath. As I talked about it, we've gone into a more challenging economic growth environment next year which raises the risk on the credit side and what you are being compensated to invest in an investment-grade debt. So to our discussion earlier about doing your homework, it makes a ton of sense. We haven't seen investment-grade debt yielding five, 5 1/2, 6% in a long time and it's very attractive. And you have to do and pick the names that you want to invest in going forward with a lot of due diligence. And for us as investors, we are sort of attracted to short-term corporate debt in particular, so maybe not as long is the seven, eight, nine, 10 year at the moment. We are very comfortable in finding horizons that we are comfortable with, two, three, four your debt in the investment-grade debt, and that is tremendously attractive at the moment. >> When we are looking at short-term investment-grade debt, there is competition here, and we beginning this question a lot, nobody was talking about GICs for the longest time because the yield on the was nothing. But one year is getting close to five, some are over five. How does an investor look at that opportunity against the bond opportunity and realize the risks of both? > There is a wealth of opportunities in the income investing with Fed funds rates at 0%, the Bank of Canada is close, we haven't really had a discussion about the income market in a long, long time. When I look at fixed income, the first thing we offer is in, and so you can get it in the preferred sharemarket, in GICs, you can get it in government bonds, investment-grade bonds, high-yield bonds, so there's a wealth of opportunities out there. It's a matter of trying to invest to your tolerances, how you want to invest in terms of taking risks. I think you're starting to be paid to take some risks and move out the risk spectrum and I think there will be more opportunities later this year into 2023, particularly in the investment-grade market and ultimately the high-yield market in 2023 as we deal with an economic environmentthat's more challenging in the spread has whited out a bit more. > Let's get to another question now, this one about the central banks, the outlook for the Bank of Canada. Will it be in a position to hold its hikes before the Fed? Definitely took their foot a little off the gas pedal when the Fed did not. >> The bond market is saying yes. It will be ending may be in line with the Fed but the difference in yields is definitely different than the Fed, so there will be a yield gap and we are already doing a reduced pace. Markets are pricing in less an aggressive path with the Bank of Canada. As a central bank, what it has to deal with is the domestic economy and how it's responding one of the big risks is how does a change in the housing market feed through the household and the consumer behaviour over the next quarter into 2023, if that really deteriorates more than the Bank of Canada is expecting, it will stop even quicker. >> We were talking earlier, the central banks always. When I statements about the fact that, well, we are taking this action on the benchmark rate side. There is still quantitative tightening. Does the QT, part of that equation filter through? If you're trying to bring down inflation and you are trying to tame the consumer and everything else, quantitative tightening is very important to the financial system but is it having any kind of effect on the average person? >> I think it's hard for the average person to connect the dots between QT and the broad stance of monetary policy but ultimately, yes it does feed through. Less liquidity in the financial system is less fuel for aggregate demand and as a consequence, that feeds into the real economy. That's the mechanism between monetary policy and the consumer and corporations. It does have an impact but it's a little bit more… It's less clear, it's a little bit more difficult to draw that off. >> Guys like us kind to get into that side of the equation. I understand, a person not in this industry is saw that they raised the cost of borrowing. We are going to get back to your question for Scott Colbourne on fixed income in a few moments time. do your own research before making investment decisions and reminder that you can get in touch with us anytime. Do you have a question about investing or with driving the markets? Send us your questions. There are two ways you can get in touch with us. Send us an email anytime at moneytalklive@td.com. or you can use the question box right of the screen here in WebBroker. Writing your question and hit send. We will see one of our guest can get you your answer right here at MoneyTalk Live. Let's check in on the markets. Of course, we heard from the Fed yesterday afternoon. The market clearly reacted but we are in the thick of her earnings season as well. You have stocks moving off of the fundamental news of how they perform, not only in the quarter behind them but what they see going forward. Right now all, you got the TSX just nudging its way into positive territory, nothing too impressive, up seven points, about 46. Restaurant brands, the parent company of the likes of Tim Hortons and Burger King, up 1.6% right now, a little over $81 per share. We saw growth in Tims and Burger King for the quarter. Checking out Equinox Gold right now under some significant pressure, down to $3.42, down almost 15%. The S&P 500, curious to see what's happening south of the border, still in negative territory. It's not too dramatic but yesterday afternoon it was pretty dramatic in terms of the ride and where we ended up, 3741, down about half a percent on that broader read of the American market. The tech heavy NASDAQ, want to see how it's pacing today, down to the tune of almost a full percent. Roku, the video streaming device maker forecast failing to impress the street, it is forecasting falling sales in the current quarter, that's affecting the stock right now, down will 6%. We are back now with Scott Colbourne from TD Asset Management, taking your questions about fixed income, so let's get back to them. What should an income investor be looking for as we take a look at the fixed income sector? Where does the hunt begin? >> Wow, pretty open, right? It's in the context of your portfolio, right? I know you had lots of conversations with some of my colleagues on the asset allocation side. I think from an overall portfolio point of view, the fixed income market is more attractive than it has ever been. So I said, look, it's going to be a challenging year for an economic growth point of view next year, but it's an opportunity to rebalance portfolios, to take advantage of theselocks an income that we haven't seen in a long time. Everybody has slightly different portfolios and where you are in your lifespan, but as I sort of acknowledge, there are different ways of expressing it. Right now at this moment, we are stepping into the credit market at the very front end of the market because we think it, the short yields have come up a long way. We are getting a nice compensation for taking credit risks. We do our own homework, obviously, is experts. But we are not putting all of our chips in the basket right now because we know that it's going to be challenging over the next year or so. I'm trying to be a little bit more optimistic for a bond guide, saying that you got an opportunity to reset your portfolio and take advantage of income, look at the classic investment grade market is the first stop going into the end of this year and early next year, and there will be other opportunities going forward. >> Okay, another question about the big risks that we are all concerned about. How might a recession hit the fixed income space? >> I think economic growth is an engine for all of us. We are going to have, you know, the measure of where we are in terms of how deep that recession is I think crucially important. It will lead central banks to stop on their rate hikes and, you know, the question is is it so severe that they have to cut? I don't think we are factoring that in at this point in time. So I think that investing in government bonds, investing in high grade, investment grade bonds makes a ton of sense, even as we move into a recession going forward. >> Before he let you go, Scott, we are running out of time for questions, let's circle back to the beginning of this discussion. Obviously, the macro concern of this year has been inflation, what central banks are willing to do, and they are willing to do quite a bit to bring it down. What do we need to think about going forward? As you said last week, the Bank of Canada seem to be saying one thing and then the Fed came out yesterday was pretty stern about where they want to be. >> Be careful in chasing narratives. We like to all sort of bite-size everything and information but I think we have to be mindful. We haven't been in this environment. It's a risk that we are not used to investing in. The Fed as the leading central bank has reminded us that they would rather err on the side of tightening then pivoting it cutting too soon, and while we may be reducing the rate hikes, whether it's the Bank of Canada, RBA's or others, we are going to be persistent, we are going to be sticking out of for a while and we definitely have to see signs of cooling in the economy, cooling in the labour market and cooling and inflation. So be mindful of not chasing quick trading narratives going forward. >> Always a pleasure to have you here. > Thanks. >> Scott Colbourne, managing director for active fixed income at TD Asset Management. We thank you for being our guest today. Stay tuned, on Monday, James Marple, senior economist at TD Bank is going to take your questions about the economy. A reminder the can get a head start in your questions for any guests at any time, email moneytalklive@td.com. That's all the time we have for today. See you tomorrow. [music]