Would I be better off waiting for the Fed to make its move on rates before investing?” “Should I wait to increase duration because a blocked Strait of Hormuz could push oil prices higher and push rates even higher?” “Should I invest in bonds gradually to reduce the risk of missing the rate peak?
On Friday, May 15, the 10-year Treasury yield closed at 4.59%, its highest level since February 2025. The 30-year Treasury yield closed near 5.12%, a level last seen in 2007. Those are significant moves because they reflect a repricing of the market’s inflation, growth, and Federal Reserve expectations.
The U.S. market story this year has been a tug-of-war between sticky inflation, slower growth, and resilient risk appetite. For fixed-income investors, that mix has produced more narrative movement than the 10-year Treasury itself.
Yield curves exist for many products and can be interrelated, yet they also carry distinctive characteristics. Normally, long-term rates are higher than short-term rates because investors demand a higher return for lending money over longer periods. This arrangement would create an upward-sloping curve much like the Treasury curves displayed to the right.
The US-Iran conflict has altered Iran’s regional influence and, more broadly, has many other consequences. It pressures government relations as well as global and financial market trading.
Total return is the entire amount of income passed to an investor holding a particular security. It annualizes any price change plus any dividends or interest earned over time.
Doug Drabik discusses fixed income market conditions and offers insight for bond investors.
Investing in financial markets is not for the timid. In a very recent Bond Market Commentary, the Head of Fixed Income Solutions, Nick Goetze, discussed “Preparing for the Storm.”
It may be fitting that Groundhog Day occured on a Monday this year. Punxsutawney Phil has been officially prognosticating the weather since 1887.
Investors have reaped the benefits of good market conditions in many of the recent years. These periods are ideal for wealth accumulation.
After three consecutive years of increasing stock prices, it can feel comfortable and certainly satisfying to ride the trend. Investors may want to capture the boon rather than be complacent with it. Long-term financial health can go hand-in-hand with the opportunities the markets have laid out.
Every week, this platform is used to highlight current ideas, fixed-income concepts, economic occurrences, and/or clarify a strategic fixed-income feature. The cohesive topic threads are fixed-income issues relevant to current market conditions.
Last week, my colleague wrote about Anchoring Bias, a psychological phenomenon that attaches a particular price or specific yield level to a bond.
The financial world is replete with terms and definitions, many of which overlap in concept or application. Perhaps I can simplify a familiar concept for most investors who strive to grow and preserve their wealth.
Duration is an often confused term when it comes to financial fixed income investing. After all, in your everyday life, the definition of duration is the length of time it takes for something to occur.
Last week I talked about the upward sloping Treasury yield curve, a welcome change from the inverted yield curve that lingered for years. The upward sloping curve means that investors are rewarded more for taking on duration.
The more duration risk taken, the more reward or yield demanded by investors. This is why, historically, the yield curve provides incrementally more yield for longer-maturity bonds.
One of the advantages of individual bonds is the ability to custom-select bonds that fit individual needs and/or goals
Since May 2020, inflation (CPI) has gone from a low of 0.1% to a high of 9.1% and back to 2.8%. It is no wonder why any investor might at least pause in this period of uncertainty.
“Know what you own” is one of the many phrases we use to help describe and define fixed income, the components of bonds, and the characteristics that affect an investor.
Cash flow and income sometimes get commingled, potentially creating confusion. Cash flow and yield typically represent two different components that can be used to accomplish different objectives.
It is sometimes perceived that the Fed’s action changes all interest rates across the yield curve, but that needs to be put in perspective.
The 2024 wild ride has proven to be a continuation of last year’s.
The Treasury yield curve has shifted appreciably all year long. In particular, the last few months have realized substantial rate changes. The shift in the Treasury curve is not isolated. The corporate curve is also changing.
Your fixed income strategy does not necessarily need to be adjusted based on every personnel or environmental change.
We have openly promoted increasing duration over the last several months. An increase may seem like an odd “wish” as it implies taking on greater price risk.
Fixed income strategy and opportunities have remained relatively unchanged over the past few months. However, the much-talked-about monetary policy change has commenced.
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.”
