AMR Investment Services plans to add a total of $100 million in investment-grade corporates and mortgage-backed securities over the next three months in anticipation of further steepening in the Treasury yield curve. Patrick Sporl, a portfolio manager of $1 billion in intermediate-term taxable fixed-income, says he will sell U.S. Treasuries and agencies all along the curve to maintain his neutral duration to the 4.5-year Lehman Brothers aggregate index. His strategy is based on the assumption that the curve will steepen another 75 basis points between the two- and 10-year sectors by year-end. As of last Monday, there was 125 basis points of daylight between those poles. Sporl believes the Federal Reserve will ease another 50 basis points by year-end, and the overall economy will begin a turnaround as earlier cuts begin to take effect, sending long-term rates higher.
Dallas Manager Plans To Sell Govvies, Add Spread Product
