Analyzing tax reform through the lens of recent earnings reports shows that the impact is likely to vary broadly across the corporate landscape. Not all companies will benefit to the same extent. More importantly, however, not all companies will make decisions that benefit bondholders. For fixed income investors, this is yet another reminder that security selection will likely be the most important factor in determining investment success in 2018.
As securitized markets continue their evolution, rigorous security selection can separate tailwinds from the traps.