Investors may find themselves prognosticating about future rates relative to current rates in an attempt to optimize their portfolio.
When we’re viewing markets, it’s not surprising sentiment shifts quickly if we don’t instantly see the anticipated results. Market pundits quickly point fingers and determine the Fed, economists, and participants are wrong. Reactions can be powerful in number and sway momentum for stocks and/or bonds.
Hastily, investors have turned their worry about inflation into worry about a recession. The catalyst was Friday’s unexpectedly disappointing unemployment number.
There are many advantages and risks associated with any investment. Whether you are buying a stock, a house, a business, or a bond, each investment has unique characteristics that allow an investor to gain from particular investment features with varying risks.
The dilemma that all Fed committees and chairpersons face when the economic cycle nears a turn but then repeats itself can be summed up with Fed chair Jerome Powell’s recent references: “Easing too soon, too much could harm inflation progress.” “Easing too little, too late could unduly weaken the economy.”
Doug Drabik discusses fixed income market conditions and offers insight for bond investors.
Although bonds may not always be able to significantly contribute to growing an investor’s wealth, their lower risk profile can bring comfort in positioning an investor to maintain that wealth.
The Federal Reserve policy can set the tone that drives interest rates across the maturity range but an earlier market rate downturn can occur as a signal of investor perception of a slowdown in the economy.
Personal Consumption Expenditure (PCE) measures the price paid for goods and services by consumers. It reflects changes in consumer behavior and captures inflation (or deflation) across a wide range of consumer expenses. Prices for both goods and services are measured.
Why is there so much angst among investors? The mixed economic signals may have a lot to do with it.
The finance world can get complicated, especially for the passive or uninterested investor. Let’s face it, some of us are not curious about sports, movies, exercise, reading, or other things while others of us carry a passion for them.
It can be easy to overthink the markets and it is human nature to try to out-guess, out-maneuver, or out-smart the average, but perhaps we can step back and simplify what seems to be occurring.
Timing has never been a crucial undertaking for fixed income allocations dedicated to asset preservation largely because this is a long-term endeavor dedicated to keeping an investor’s wealth intact.
This week’s discussion is a follow-up to last week’s overview of the elongation of the economic cycle.
For lack of a better word, the fixed-income mantra is getting stale. Interest rates have peaked, and they remain at elevated levels, allowing investors to take advantage of higher income and ample cash flow opportunities.
The Federal Open Market Committee (FOMC) comprises the Federal Reserve System’s decision-makers on monetary policy in the United States. This monetary policy is designed to keep the Fed’s dual mandate of maximum employment and price stability in line with targets.
Recessions are part of the economic cycle. No one looks forward to a recession because of the pain it can impose on investors or worse, job security.
The can has been kicked down the road several times but it feels like the end of the road is in sight.
Many investors buy individual bonds as a means to preserve their wealth. They can serve as a method to balance growth assets (such as stocks).
We did an internal survey among our associates, attempting to get a feel for their views on various economic and fixed income topics. Any survey result concerning the future can net inexact results but nonetheless reveal general sentiment. Attitude, outlook, and opinions can help shape the market.
A lot was going on with rates in 2023, yet, at the end of the year how different were things? The 10-year Treasury yield's lowest closing was 3.30%, while its highest close was 4.98%.
The market has been indecisive but with reason. 2023 has been filled with strong opinions however, many of the opinions are of contrasting beliefs. Reading the future is not easy.
The financial markets, investor opinions, and world events have been all over the place – so bear with me this morning as I am going all over the place with a variety of year-to-date observations and comments.
The 2- through 30-year Treasuries rallied hard to drop yields from 12 to 18 basis points. By example, the 10-year Treasury price bottomed out at $91.86 (4.93%) and peaked at $95.25 (4.48%). This is a 3.4-point price swing or 45 basis point drop in yield.
Higher for longer. The Federal Reserve will likely maintain higher interest rates and remain open to another rate hike. Borrowing costs for households, businesses and governments have risen with soaring rates.
I was asked a pretty good question following an internal meeting late last week. The question started out by noting that we have been promoting going longer on the curve for a while now and then asking why we think longer-term rates will come down.
As a strategist, I work with financial advisors every day creating custom fixed income portfolios based on client’s financial needs and goals – with a keen eye on the importance of a balanced portfolio.
When the media speaks of the yield curve, they are likely referring to the Treasury yield curve. It is the point of reference for interest rate levels and investment comparison.
Inverted curves (when the gold line goes below the red line meaning that short maturity yields are higher compared to longer maturity yields) have preceded recessions.
In general, portfolios can be split into growth assets and principal protecting assets. Growth assets tend to have greater risk coupled with greater income/reward.
Sometimes things sound the same, look the same, or feel the same – but they are not. It doesn’t necessarily mean one is better or worse than another but uniquely dissimilar and serving, unlike purposes.
High-quality investment grade municipal bonds provide growth-like returns for investors in a relatively more conservative investment vehicle than equities. Have your financial advisor assess the opportunity as it pertains to your specific goals.
Markets can present challenges for investors as volatility, direction, supply, outside influences, and future expectations are continuously changing.
Doug Drabik discusses fixed-income market conditions and offers insight for bond investors.
Getting lost in the moment is easy to do. When planning and executing your fixed income portfolio, looking long term is more likely to get you to your goal. Fixed income portfolio allocations are often meant to first protect principal and second, to optimize income and cash flow per your specific circumstances.
Investors may be able to lock in higher yield levels notes Doug Drabik, Managing Director, Fixed Income Research and Nick Goetze, Managing Director, Fixed Income Solutions.
