Investors loading up on long-term bonds have a history at their back.
The bond market’s re-energized bulls may want to dial down their excitement because their fortunes hinge on whether an abstract, almost elusive number, is as low as they assume.
Some of the biggest bond managers are sticking to their bullish view on the market for US government debt, even as that trade looks riskier by the day.
William Eigen isn’t about to apologize for his bond fund’s performance this year. Yes, his $8.7 billion JPMorgan Strategic Income Opportunities Fund is trailing about 60% of its peers after trouncing nearly every one of them last year.
The once-hot Wall Street trades of 2023 are all falling apart, in a fresh blow to market pros blindsided again and again ever since the pandemic broke out.
Bill Gross, the former chief investment officer of Pacific Investment Management Co., recommended buying short-term Treasury bills, expecting the debt-ceiling issue eventually gets resolved.
When March’s bank failures ignited a historic bond rally, few, if any, made more money than Josh Barrickman. His army of funds gained roughly $26 billion, the equivalent of more than $1 billion in paper profits every single trading session.
This year’s top US bond managers agree that Federal Reserve interest-rate cuts are inevitable this year. The main debate they see is how deep the economic pain gets.
Daniel Ivascyn rode one big trade all the way to the top of the bond-market universe: speculative mortgage debt that he scooped up on the cheap in the wake of the great financial crisis.
The bond market humbled Wall Street’s best and brightest in 2022.
Bill Gross pioneered the “total return” strategy in the 1980s that revolutionized the once-sleepy bond market.
Ray Dalio came out with a gloomy prediction for stocks and the economy after a hotter-than-expected inflation print rattled financial markets around the globe this week.
Bond bulls, while savoring a stellar rebound in returns fueled by growing recession fears, are braced for potential setbacks.
Signs of a rapidly deteriorating US economic outlook have spurred bond traders to pencil in a complete policy turnaround by the Federal Reserve in the coming year, with interest-rate cuts in the middle of 2023.
There are no shortage of bears making similar claims these days. Between the Russia-Ukraine war, the aggressive tightening by the Federal Reserve, soaring inflation and Covid lockdowns in China, there are plenty things to worry about. The S&P 500 has already lost 12% this year, while the Nasdaq Composite cratered into a bear market after sliding more than 20% from its peak in November. Key bond benchmarks are down more than 10%.
The bond market is dialing back expectations for how quickly and steeply the Federal Reserve will raise interest rates as Russia’s war in Ukraine threatens to exert a drag on global economic growth.
A bedrock of long-term investing, a portfolio split 60/40 between equities and high-quality bonds, is set for its worst monthly slide since the market meltdown in the early days of the pandemic.
Bonds aren’t working as a safe haven like they used to.
