TCW Core Fixed Income Fund

Quarterly Commentary


What a difference a quarter makes! Or, rather, what a difference a security blanket (the suggestion of accommodative Fed policy) can make. With trade uncertainty and disappointing manufacturing data, virtually non-existent inflation and slowing housing metrics, expectations increased for a renewal of monetary accommodation in the second half of 2019. After laying the groundwork in January with the introduction of dovish language, the Fed signaled an openness to cut rates during its June FOMC meeting, confirming as long suspected – the Fed is following rather than leading the markets. By second quarter-end, the probability of a July cut was priced in with near certainty. Perhaps more remarkably, the market began to price in roughly four cuts by the end of 2020. Taking stock of where we stand today, monetary policy has come full circle as investors once again receive succor from central bankers. It is not just the Fed - ECB President Mario Draghi delivered a boost to global markets as he indicated that additional monetary easing could be on the way, with a seemingly low bar for central back action. While the 10-Year U.S. Treasury yield revisited sub-2% (last seen in 2016), French 10-year yields fell to zero for the first time to bring the total global stock of bonds yielding below-zero near 2016’s record level of $12.2 trillion...

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Bloomberg Barclays U.S. Aggregate Bond Index – A market capitalization-weighted index of investment-grade, fixed-rate debt issues, including government, corporate, asset-backed and mortgage-backed securities, with maturities of at least one year.

About Securities

Securities issued by U.S. government agencies and authorities are not insured, and may not be guaranteed by the U.S. Government. Fixed income investments entail interest rate risk, the risk of issuer default, issuer credit risk, and price volatility risk. Funds investing in bonds can lose their value as interest rates rise and an investor can lose principal.

Portfolio Characteristics & Holdings
It should not be assumed that an investment in the securities listed was or will be profitable. Portfolio characteristics and holdings are subject to change at any time.

This content may include estimates, projections and other "forward-looking" statements. Actual events may differ substantially from those presented. TCW/MetWest assumes no duty to update any such statements. All projections are based on current asset prices and are subject to change.

Subject to Change

Any opinions expressed are current only as of the time made and are subject to change without notice. TCW assumes no duty to update any such statements. The views expressed herein are solely those of the author and do not represent the views of TCW as a firm or of any other portfolio manager or employee of TCW.

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The TCW Funds are distributed by TCW Funds Distributors LLC