Resource Logo

Hello, you are using an old browser that's unsafe and no longer supported. Please consider updating your browser to a newer version, or downloading a modern browser.

Receive Updates
Resource Arrow Back to all
Date: September 10, 2018

Geopolitical Tensions Heighten Headwinds Facing Fixed-income Investments [Video]

Created with Sketch. Run Time: 2:06
Michael Terwilliger Portfolio Manager Resource Credit Income Fund
Tariffs, potential trade wars, and geopolitical uncertainty will create temporary demand for the Treasury, but the long-term trajectory seems tilted firmly towards higher rates.

It would be a vast understatement to say we are living in uncertain times. The U.S. is engaged in direct negotiations with North Korea, while imposing tariffs on our allies and beginning a trade war with China. The geopolitical order as we know it is upside down.

Additional risks have also materialized in recent months. Emerging market countries such as Argentina and Turkey have raised rates to protect their currencies against global capital flight. Harkening back to the European debt crisis of 2011, questions about the European currency have also re-emerged this year following Italy’s most recent elections.

Against this backdrop, we would expect the U.S. Treasury—particularly the 10-Year Treasury—to act as a “haven” asset. Meaning, demand to hold “safe” Treasuries would spike in a rocky investment environment. This in turn would put downward pressure on yields. However, while geopolitical factors influence the long-end of the Treasury market in the short-term, U.S. monetary and fiscal policy determine the path over the long-term. And both policies are pointing to higher yields.

The Fed is now signaling two additional rate hikes in 2018. The Fed is also continuing to unwind its balance sheet with so-called Quantitative Tightening expected to reach a pace of $50 billion a month by the end of the year. In Washington, deficit spending continues to grow, with the recent tax cut only adding to the pressure on interest rates over the long term.

Tariffs, potential trade wars, and geopolitical uncertainty will create temporary demand for the Treasury, but the long-term trajectory seems tilted firmly towards higher rates. This dynamic will continue to weigh on the performance of traditional fixed income. Investors must look at core floating-rate loans to combat mounting interest rate risk. These loans have a floating-rate coupon that reacts to market rate increases, offering the potential for incremental interest income.

Resource Securities LLC, Member FINRA/SIPC.
This information is educational in nature and does not constitute a financial promotion, investment advice, or an inducement or incitement to participate in any product, offering or investment. It is not intended to be used as a tool to determine your specific financial situation, tax status, investment objectives, investment experience, suitability for any specific investment, risk tolerance or investment profile. Resource is not adopting, making a recommendation for or endorsing any investment strategy or particular security.

Resource is the marketing name for Resource Real Estate, LLC, Resource Alternative Advisor, LLC, and their affiliates. Resource may distribute certain products through Resource Securities LLC, a wholly owned broker/dealer, Member FINRA/SIPC


The information contained herein does not constitute an offer to sell or a solicitation to purchase securities. Such offers or solicitations can only be made by means of a prospectus. Prior to making any investment decision, you should read the applicable prospectus carefully and consider the risks, charges, expenses and other important information described therein. The value of your investments may decline, and you could lose some or all of your investment. To obtain a prospectus containing this and other information, please call (866) 773-4120 or download the file from Read the prospectus carefully before you invest.


Resource has an interval fund that is distributed by ALPS Distributors, Inc. (ALPS Distributors, Inc. 1290 Broadway, Suite 1100, Denver, CO 80203). Resource Alternative Advisor, LLC, Resource Real Estate, LLC, their affiliates, and ALPS Distributors, Inc. are not affiliated.


Performance data quoted represents past performance. Past performance is no guarantee of future results and investment returns and principal value of the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted above. For performance information current to the most recent month-end, please call toll-free (866) 773-4120 or visit


All statements and information other than statements of historical fact included on this website regarding strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. When used on this website, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. You should not place undue influence on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make on this website are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved because of the number of risks and uncertainties, many of which are beyond our control, including but not limited to uncertainties concerning the properties being operated and sold or refinanced, leverage and meeting debt service obligations, operating properties in different locations throughout the U.S., general, market or business conditions and changes in laws or regulations. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. To check the background of Resource Securities LLC or any registered individual, please go to FINRA’s BrokerCheck.