In the long run growth and inflation are the main determinants of fixed income returns, New Century Advisors uses proprietary trend models to determine where the relative differences in growth and inflation will come from and how they will affect the various bond markets.  Other fundamentals that drive those variables include central bank policy, fiscal policy, demographic trends, and current account trends.

Fundamental views must be tempered with both shorter term technical factors as well as human judgment.  In the short to medium run technical factors such as political events, momentum trends, supply curves, and global risk appetites can dominate the fundamental data.

Human judgment that can only come from a long history of operating in these markets is important to determine how to position the portfolio when the fundamentals and technicals point in different directions.  Furthermore, New Century Advisors' experience allows us to position the portfolio for events that are missing from the time series, yet effect of global returns.  This allows us not to succumb to the modeling problems of assuming everything that can happen has happened in the past.