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This podcast is being brought to you by John Hancock Investment Management Distributors LLC, member FINRA, SIPC. The views and opinions expressed in this podcast are those of the speakers, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security. There is no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal.

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John Bryson

Hello and welcome to the Portfolio Intelligence Podcast. I'm your host, John Bryson, head of investment consulting and education savings at Manulife John Hancock Investments. Today is June 26th, 2026, and we're at an interesting moment for fixed income investors. We've gotten a look at the new U.S. Federal Reserve (Fed) under Kevin Warsh. Geopolitical developments continue to influence financial and currency markets.

Equity volatility is again increasing. And at the same time, credit is holding up much better than many would have expected. To help us break it all down, I'm joined by Jeff Given of Manulife Investment Management, where he is the co-head of US core and core plus fixed income. Jeff and his team have been actively navigating these crosscurrents, finding value across credit, securitized markets, and the yield curve.

Jeff, thanks for joining me today.

Jeff Given

Thank you for having me on.

John Bryson

All right. So let's start with the macro backdrop. Given the recent moves in prices and ongoing developments with Iran, how are you thinking about the macro environment and where do you see rates headed from here?

Jeff Given

I think the macro environment is going to be generally pretty positive for the US economy. Inflation has picked up a little bit, but growth still remains strong. The unemployment rate has remained fairly steady, and overall employment looks better than it did last year.

By the end of the year, we're not really going to see much change in interest rates. However, there's going to be a lot of uncertainty, especially on front-end rates. With inflation running a little bit higher, there will be some concern, although I do think prices should start to come down toward the end of the year.

The economy remains robust, so I think you're going to see some uncertainty and volatility around where short-term interest rates are going to be. Further out the curve, I think you'll see a bit more stability. We're already starting to see that over the last couple of weeks, where we've stabilized in that mid-4% range for 10-year Treasuries.

John Bryson

Let's dig into that a little bit more. We're hearing notable hawkish commentary from the Fed and from Kevin Warsh. How are you interpreting those views versus how the market may be interpreting them? What's that mean for the yield curve? You said you're not so worried about rate hikes, but how is the market pricing in the potential for them?

Jeff Given

Right now, the market is pricing in around one and a half to two rate hikes by the end of the year. It does make sense to price in more rate hikes than rate cuts simply because we've seen inflation tick up over the last few months.

However, I think those concerns will start to alleviate as we move through the year. Ultimately, I think Warsh's hawkish comments are positive for the market. They show a willingness to fight inflation, which remains front and center in investors' minds.

Price levels have increased significantly over the last several years, and I think the Fed being more hawkish is generally positive. Over the last couple of weeks, you've started to see the long end of the Treasury market rally a bit. That inflation risk premium investors build into longer-term bonds is beginning to come down if the Fed is willing to control inflation. So while I don't ultimately think we'll see those hikes, the more hawkish tone is generally positive.

John Bryson

With the Fed becoming more hawkish, there's also discussion around the possibility of less transparency and less forward guidance. If we see more volatility on the front end, how does that change the playing field? And how does it affect you as a bottom-up fundamental manager?

Jeff Given

I actually think it's healthy to have a little less forward guidance than what we've seen over the last 15 years. We've reached a point where policy is very data dependent, so forward guidance doesn't add nearly as much to market pricing as it once did.

Going forward, the market is going to have to anticipate where the Fed might go and reevaluate that continuously. Without those guideposts, you could see a little more volatility in the short run and perhaps somewhat higher risk premiums across various asset classes.

Overall, though, I think it's healthy. It creates more of a free market environment where the market is making more of the decisions rather than simply reacting to Fed guidance.

I also think it favors a bottom-up approach. Finding sectors and securities that are more attractive than others should be rewarded. It's always been difficult to get top-down macro calls right, and if the Fed offers less guidance, that challenge becomes even greater.

John Bryson

Equity volatility has been picking back up again, while credit markets have remained resilient and spreads relatively tight. What's underpinning that stability, and how should investors think about corporate fundamentals moving forward?

Jeff Given

There are a couple of things underpinning that stability.

First, fundamentals are very strong. Profit margins remain near peak levels. Interest coverage ratios—the amount a company earns relative to the interest it has to pay—remain high. Top-line growth is there for many companies, and we're seeing a lot of earnings beats.

The second piece is more technical in nature. While spreads are tight, yields remain near the highest levels we've seen in almost 20 years in credit markets. There are many buyers looking at yields north of 5%, maybe 5.5%, on solid credits and seeing attractive value.

So strong fundamentals combined with attractive all-in yields are providing significant support for the credit markets.

John Bryson

You've adjusted portfolio positioning this year, moving from a more pronounced steepener stance to a more balanced approach. What drove that shift?

Jeff Given

Over the last several months, we've become more neutral relative to the curve. The main driver has been inflation coming in a bit higher than expected and the potential for the Fed to lean toward raising rates rather than cutting them.

We wanted to remove some of that curve decision from the portfolio. Longer term, I still think the curve will steepen once we get through the next six to twelve months of inflation and rate uncertainty.

When you look at government spending—not just in the US but globally—and the amount of issuance governments face, that should ultimately lead to a steeper curve over time.

John Bryson

You've also emphasized the 5-to-7-year segment of the curve as particularly attractive. Walk us through why.

Jeff Given

We think the 5-to-7-year part of the curve is attractive for several reasons.

First, if rates start to come down, you're locking in yields that remain near the highest levels we've seen in 20 years. When you compare yields in the mid-5% range with inflation in the low- to mid-3% range, you're getting a very attractive real return.

Then there's the roll-down benefit. If you purchase a seven-year bond today and hold it for a couple of years, it becomes a five-year bond. On a positively sloped curve, that decline in yield can create price appreciation.

Those two factors make that part of the curve attractive.

It's also a compelling area for corporate credit, because you're not getting paid much more to own a 10-year or 30-year corporate bond than a 7-year corporate bond. So why extend further out the curve if you're not adequately compensated for the additional credit risk?

John Bryson

One thing that stands out in your portfolio is the agency MBS exposure. What's the opportunity set there today?

Jeff Given

Agency MBS continues to look attractive, and we've remained overweight the sector.

One reason is that much of the market trades at a discount. The biggest risk in mortgage-backed securities is prepayment risk—homeowners refinance, and you get paid back at par.

However, most homeowners refinanced in 2020 and 2021 at very low rates. That reduces the risk of unexpectedly shortened maturities due to refinancing.

On top of that, yields are comparable to BBB corporate credit, but you're benefiting from a government backstop. You're earning similar yields while taking less credit risk.

We still find opportunities in corporates, ABS, and CMBS, but agency MBS remains a high-quality, liquid sector where investors are being compensated well today.

John Bryson

Any final thoughts for investors as they think about fixed income for the remainder of 2026?

Jeff Given

One important thing is that investors need to look forward rather than backward.

Many people remain focused on the experience of 2022 and are staying short, which can expose them to reinvestment risk a few years down the road if cash yields move lower.

Starting yields matter in fixed income. When you're looking at yields in the 4.5% to 5.5% range, that's a very strong starting point. Roughly 90% of a bond portfolio's return over five years is driven by its starting yield.

One reason returns were poor in 2020 and 2021 was that starting yields were exceptionally low. That's no longer the case.

The second point is to avoid focusing too heavily on short-term market movements. Markets can move around quite a bit. Looking out 12 to 18 months and maintaining an intermediate- to longer-term perspective can help eliminate some of the noise from portfolios.

John Bryson

That's great insight. Many people think year-end is when they should revisit portfolio positioning, but I'd argue now is a great time to do it.

Fixed income continues to play an important role in portfolios. It's a long-term investment, and it provides stability. With equities looking richly valued today, it's worth taking another look.

Jeff, I really appreciate the time and insights you shared. One key takeaway is that there are always compelling opportunities somewhere in the fixed income markets—whether that's credit, securitized assets, agency MBS, or elsewhere.

Jeff, thanks for joining us.

Folks, as always, if you enjoyed this, please subscribe. And thanks for listening to the show. Have a great summer until we talk next time.

This podcast is being brought to you by John Hancock Investment Management Distributors, LLC, member FINRA, SIPC. The views and opinions expressed in this podcast are those of the speakers, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security.

There is no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal.