For many investors, the fixed income portion of their portfolio is intended to be the ballast of the portfolio.
We are approaching a turning point in policy decisions as the FOMC attempts to walk the fine line of hitting their inflation targets while maintaining a healthy labor market.
It’s inevitable. A recession is coming. Whether it gets here next month, next quarter, next year, or next decade will be continuously debated until it arrives. Yet, one thing that everyone will agree on is that we will have another recession eventually.
Market factors are constantly changing and require monitoring, analysis, and flexibility by the investors when it comes to choosing appropriate investments.
One of the main advantages of constructing a portfolio of individual bonds is that it can be customized to meet the precise needs, wants, and objectives of the investor
Fed Funds Rate: According to Bloomberg calculations based on where Fed Funds futures are currently trading, there is a 20% chance that the FOMC cuts the overnight rate in June and a ~50% chance that they cut in July.
For many investors, fixed income is intended to serve as the ballast of a portfolio. This means that it hopefully provides stability in turbulent times while providing consistent and known income, cash flow, and return of principal.
One of the major benefits of municipal bonds is that the interest earned is exempt from federal income taxes. The appeal of earning money that you do not have to pay taxes on understandably piques the interest of many investors.
For many investors, fixed income investments have a primary objective of preserving wealth. The known characteristics of owning individual bonds are a major reason for this: known income, known cash flow, known redemption date, known redemption value.
Welcome to 2024! As we wade into the new year, you will undoubtedly read and hear a wide range of forecasts predicting what financial markets are going to bring us over the next 12 months.
Yields are at some of their highest levels in over a decade. This means that if you own fixed income in your portfolio, there is a good chance that you are seeing unrealized losses on your monthly statements (fixed income math = yields higher, prices lower).
Anyone who even casually pays attention to the financial media has likely become familiar with the current state of inflation as well as how high interest rates have risen over the past ~2 years.
If held until the bond is redeemed (either by call or maturity), the annual yield earned for the life of a bond is known upfront at the time of purchase. Knowing the return on an investment upfront makes long-term financial planning a much easier task.
While this is a market estimate and in no way guaranteed, let’s just pretend for a minute that there is a 100% chance of this coming true and the FOMC is going to raise the Fed Funds rate by an additional 50 basis points.
Drew O’Neil discusses fixed income market conditions and offers insight for bond investors.
It is difficult to convince yourself that if things are going a certain way they will not continue down the same path indefinitely.
