Loading…
Loading…
Short-term investment-grade bond strategies, with durations in the two-to-three-year range, are well positioned to capture a meaningful yield advantage without the rate sensitivity that has challenged longer duration strategies in recent months. The yield to worst on a diversified short-term bond portfolio currently sits between 4.5% and 5.0%, more than 100 basis points above what bank savings accounts and government money market funds are currently yielding. Although the path for rates is highly uncertain, the range of outcomes in which short-term bonds outperform cash is considerably wider than the range in which they don't.
Expectations of interest rate reductions by the Fed usually encourage fixed income investors to take on more duration risk. That's a sensible approach.
By Kevin Flanagan, Head of Fixed Income Strategy Key Takeaways July's sharply revised jobs report, with payrolls averaging just +35k over three months, has significantly softened the labor market backdrop and opened the door for a potential September Fed rate cut.
By Vanya Sharma, Senior Associate, Capital Markets Key Takeaways As equity markets remain volatile, WisdomTree's fixed income ETFs—like AGGY and SHAG—offer investors a way to anchor portfolios with higher-yielding, investment-grade exposure while managing interest rate risk.
By Kevin Flanagan, Head of Fixed Income Strategy Last week, I wrote about the money and bond markets apparently doubling down on their optimistic expectations for Fed rate cuts this year. However, an interesting development occurred over the last week: Fed pushback.
By Kevin Flanagan, Head of Fixed Income Strategy While the Fed didn't cut rates at its December policy meeting, the way the money and bond markets have reacted post-FOMC, one could be forgiven for thinking the rate cuts had already begun.
While the recent January jobs report brings hope that the U.S. economy could stave off a potential recession in 2023, it also breeds worry that interest rates could stay elevated for longer than the capital markets expect. As such, investors will need a short-term rate strategy in their bond portfolio.
Interest rates currently sit at a target range between 2.25%-2.50% after the latest 75 basis point rate high by the Federal Reserve this week. The increase comes in response to June's unexpected 9.1% CPI as the Fed remains committed to its fight against inflation.