BND

Bond traders predict that the Federal Reserve‘s interest-rate cuts will go well beyond what the agency has forecast for the next nine months. Traders in the U.S. rates options market expect a much higher 3 percentage points worth of cuts by March. This dwarfs the Fed’s recent projections of just 25 basis points of reductions by the end of 2024 and a total 125-basis-point cut by the end of next year, Bloomberg reported. Options-market activity related to the secured overnight financing rate over the past three sessions show a significant upside if the Fed reduced its key rate by 300 basis points to 2.25% by next year’s first quarter. Also Read: Bank Stocks Trend Upward As Fed Shares

Markets are expecting the neutral rate — a theoretical rate that remains stable due to full employment and stable inflation — to stay higher than policymakers are forecasting. What does this mean for bond exchange-traded funds? A higher neutral rate may limit the Federal Reserve’s ability to cut interest rates, possibly causing headwinds for bonds, Bloomberg reports. Forward contracts on the five-year interest rate in the next five years — a proxy for the market's view of where U.S. rates might land — have stagnated at 3.6%. That is down from last year's peak of 4.5%, but it's still more than one full percentage point higher than the average over the past decade and above the Fed's ow

The European Central Bank is universally expected to cut interest rates for the Euro area this week. Cutting back on interest rates for the first time in two decades can be seen as a positive sign for the dwindling European economy, which has been hit by slow growth and poor demographic patterns. Average inflation in Euro area countries has been mostly on a downward trend since last year, reaching an annual 2.4% in both March and April, down from a peak of 10.6% in October 2022. The measure, however, is very dynamic within the block, with figures as low as 0.4% for Lithuania and as high as 4.9% in Belgium. The ECB commenced its latest rate hike cycle in July 2022. Key ECB interes

Investors are growing increasingly concerned about the potential impact of the mounting U.S. debt on the bond market, with the issue expected to take center stage as the presidential election approaches. What Happened: The U.S. government’s debt is expected to balloon, potentially overshadowing an anticipated bond rally. This is due to the ongoing large fiscal deficits, which show no signs of abating ahead of the presidential election, Reuters reported on Friday. Investors are already adjusting their portfolios to mitigate potential losses if Treasury yields surge due to supply and demand imbalances. There are also concerns that the uncertainty surrounding the necessary debt for defici

A major trend shift is unfolding in the bond market, as key Treasury yields are currently testing the support of the crucial 200-day moving average, following the release of benign economic data that has cemented investor bets on Federal Reserve rate cuts. Last month, the inflation rate calculated using the consumer price index (CPI) came in at 3.4% compared to the same month last year, down from 3.5% in March, and in line with the forecasted 3.4% increase. The “core” inflation rate, which excludes volatile energy and food prices, also matched estimates, falling from 3.8% to 3.6%. April's inflation reading has raised hopes that the disinflation trend may restart after three consecutive

The bond market is showing new signs of unpredictability as expectations over Fed rate cuts shift with every new piece of economic data. Last week, Fed Chair Jerome Powell acknowledged that rate cuts for this year are being decided on a meeting-by-meeting basis. Therefore, it's not possible to predict how much the cost of borrowing will drop in 2024. However, some investors continue to price in at least three rate cuts this year. This took the S&P 500 and other market gauges to record heights last week. Investors priced in significant rate cuts for 2024 during the first two months, as inflation showed consistent signs of easing. But rising prices from February's CPI report came

Vanguard has become a towering figure in the world of exchange-traded funds (ETFs). As investors increasingly turn to ETFs for their diversification, lower costs, and liquidity, understanding the offerings and strategies of major players like Vanguard is essential. Yet, amidst this expansive array of financial instruments, one notable absence in Vanguard’s portfolio raises eyebrows: the lack of a Bitcoin ETF. Here, we delve into the five critical factors about Vanguard ETFs, also explaining why a Bitcoin ETF is deliberately missing from their portfolio lineup. Vanguard’s Status In The ETF Arena Vanguard ranks as the second-largest ETF issuer globally, overseeing a diverse p

As 2023 concludes, the bond market has witnessed a remarkable rally, bolstered by the strength of the U.S. economy and a reduction in inflationary pressures. Despite this, some analysts caution that investor optimism might be overly optimistic for the upcoming year, The Wall Street Journal reports. What Happened: This past year, the bond market's journey has been marked by significant volatility. The 10-year U.S. Treasury note yield, a key market indicator, has dramatically fluctuated. Initially driven to highs not seen in over a decade by concerns over persistent high interest rates, these yields have since retreated due to various factors, including banking sector stresses and shifts in

The traditional 60/40 investment portfolio has recorded a remarkable year of growth in 2023, sharply rebounding from a disappointing year in 2022. As of Dec. 27, the year-to-date performance of the 60/40 portfolio, benchmarked by the iShares Core Growth Allocation ETF (NYSE:AOR), stands at approximately 13%. This performance figure ranks as the third-best year for the strategy since its inception in 2008, trailing only behind the strong years of 2009 and 2019. As we enter the new year, investors are pondering whether the favorable conditions that supported both equities and bonds in the second half of the year will endure. 60/40 Portfolio In 2022-2023: From Downturn to Upswing T

New research from Goldman Sachs reveals that U.S. Exchange-Traded Funds (ETFs) have surpassed the threshold of $8 trillion in assets under management (AUM), setting an all-time high this week. This milestone is another clear indicator of the robust health of the investment landscape in the United States, as major stock market indices trade at or near their record levels. The S&P 500, for instance, has rallied by 25% year to date, trading at a mere 1% distance from its all-time highs. Tech stocks in the Nasdaq 100 have soared 53% year to date, hitting a record high on Tuesday. But the increase in the ETF market size isn't just about a bullish stock market. Rising assets among U.S.

In recent weeks, several bond exchange-traded funds (ETFs) have experienced a significant surge in inflows, indicating a heightened interest among investors. This shift coincided with a market that significantly upped bets on Federal Reserve rate cuts for 2024, backed by a robust and ongoing disinflationary trend in the U.S. economy. Speculators have gone as far as factoring in an initial rate cut as early as March 2024, with whispers of a total of five rate cuts by December 2024. But which bond ETFs are currently piquing investors’ interest? From ‘Cash-Like’ to ‘Equity-Like’ While the third quarter in 2023 witnessed a notable uptick in inflows into cash-linked bond ETFs, pr

Investors have accumulated record amounts of cash and equivalent assets as a way to hedge against the volatility of recent times. Now, fund managers are urging investors to put that money to work, as decreasing inflation and the potential for an economic slowdown may lead to profitable opportunities in the bond markets. According to ICI Global, capital invested into money market fund assets reached a record of $5.73 trillion last week. Money market funds are characterized by having very low volatility and very high liquidity, holding large amounts of cash and other low-risk securities in their portfolios. Investors tend to lean towards money market investing in times of uncertainty,

Market participants are eagerly awaiting for the March personal consumption expenditure (PCE) price index report from the Bureau of Economic Analysis on Friday (April 28), before the market opens.  With the next FOMC meeting in less than a week, what is regarded as the Fed's preferred gauge of inflation will be considered a key signal for assessing market expectations about the Fed's impending policy moves. What To Know: The PCE price index grew 5% year on year in February 2023, down from 5.3% in January, and 0.3% month on month, down from 0.6% in January.  The Core PCE price index, which measures inflation over a wide range of consumer expenditures excluding energy and food and is of p

A structurally higher inflation is currently being "locked in" by central banks, which will force the stock market to re-adjust to a new inflation-interest rate regime over the coming years, said Michael Hartnett, chief investment strategist at Bank of America Securities.  In his latest "The Flow Show," Hartnett highlighted core inflation in major economies remained stubbornly high around 5%-7%, and now has risen above 3% also in Japan. Structurally low unemployment rates are key factors keeping pricing pressures sticky, according to the strategist. "The world of zero inflation and zero interest rates is fading into distant past," Hartnett says, as a classic balanced equity-bond portfoli

ETF investors are withdrawing funds from the main U.S. equities ETFs, which track the S&P 500 index and the tech-heavy Nasdaq 100. Other ETFs have seen interesting movement, as well. The SPDR S&P 500 ETF Trust (NYSE:SPY), the biggest ETF tracking the S&P 500 index, registered outflows for three consecutive days (as of Wednesday, April 19) totaling $1.9 billion, according to Koyfin data. This marks the SPY's worst week in terms of flows since the Silicon Valley Bank's collapse in March. Year to date, SPY has seen cumulative outflows of $7.8 billion.  The Invesco QQQ Trust Series 1 (NASDAQ:QQQ), the world's largest ETF tracking the tech-heavy Nasdaq 100 index, has had outflows for $970 mil

Net short bets against U.S. treasuries have reportedly risen to the highest level in last one year in the week ending last Tuesday. What Happened: According to the latest report from the Commodity Futures Trading Commission, net-short leveraged fund positions in 10-year futures rose by almost 150,000 contracts in the week to last Tuesday, marking the biggest bearish shift since March 2022, reported Bloomberg. Also Read: How To Invest In Startups Fast-money funds appear to be temporarily entering into bets against longer-dated bonds after taking hits during the recent banking crisis volatility when they took positions expecting a sell-off in shorter maturities, the report said. On

Pimco Multi-Asset Strategies Portfolio Manager Erin Browne reportedly said that rates and equities are singing from different hymn books currently. What Happened: Browne said that while the former is pricing-in accelerated rate cuts during second half of this year and into 2024, equities are priced for rich valuations. Browne told Bloomberg TV this indicates the rates market is starting to price-in the economy and is heading towards a recession. Also Read: Best Penny Stocks "Equities, however, still are priced for very rich valuations, continued growth and expansion this year and even more so in 2024, and are really not focused on the fact that we are heading into a recession. So,

As The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, announced a reduction in oil production by 1.16 million barrels per day beginning May, the impact was visible not just in oil prices but other assets too, when trading commenced in Asia on Monday. What Happened: The decision certainly comes as a new headache for the Federal Reserve, which appeared to be facing a tough time over the last few weeks, fighting inflation and trying to contain the banking crisis at the same time. With oil prices rising, the central bank will now have to figure out how much of an impact will this have on the future path of inflation. Also Read: Best Oil ETFs As the

Morgan Stanley Chief U.S. Equity Strategist and CIO Mike Wilson reportedly said the bond market is effectively pricing some sort of a recession at this point, while the equity market is still in denial. "When the yield curve goes negative, it has high predictability that a recession will be coming within twelve months. But 12 months is a long time. The real trouble starts when the yield curve re-steepens. Because that’s essentially the bond market saying the Fed’s going to have to be cutting here at some point," Wilson told Bloomberg TV. Also Read: Best Penny Stocks Price Action: Yield on two-year treasury notes fell from over 5% levels seen in early March to as low as 3.8% last wee

Market forecaster Jim Bianco, president and Macro Strategist at Bianco Research, pointed out that the S&P 500's movement over the last week has shown a lot of reversals. What Happened: Bianco's comments came in the backdrop of a positive day for the markets. On Thursday, major Wall Street indices closed in the green. The SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.78% while the Invesco QQQ Trust Series 1 (NASDAQ:QQQ) gained 0.83%. See Also: Best Penny Stocks "The S&P has reversed nine times in the last seven trading days. Today’s rally is less than 50% of the previous two days," Bianco tweeted, adding that investors should not over-read into the intra-day moves too much. "The real

Harvard Professor Jason Furman believes the Federal Reserve is in danger of falling behind the curve again which may increase the cost of reining in inflation. "The Fed doesn’t need to change course at its March meeting — it should stick with the reaction function it set out. Which, in light of recent data, would be consistent with raising rates by 50bp," Furman tweeted. Also Read: Best Penny Stocks The Professor cited his opinion piece in The Wall Street Journal in which he argues that the central bank should shift from a 25-basis points hike to a 50-bps increase at its next meeting in March. Furman pointed out in his tweets that just about every measure of inflation measured ov

As fears of sticky inflation and persistent rate hikes continue to impact markets, the average rate on the 30-year fixed mortgage reportedly breached the 7% mark on Thursday. Rates had jumped over the 7% mark last October, hitting the highest level in over 20 years, according to a CNBC report. However, they fell in the following months as inflation seemed to be cooling. By mid-January, rates were hovering close to 6%, leading to a spike in buyers signing contracts on existing homes, the report said. Also Read: Best Penny Stocks "Rates continue to move at the suggestion of economic data, and the data hasn't been friendly. This is scary considering this week's data is insignifican

Allianz chief economic adviser and noted economist Mohamed El-Erian reportedly said every time the central bank falls behind, the risk of the central bank pushing the economy into recession goes up. "The minute you go to the 10-year (Treasury yield), you know you are bringing in a whole set of other issues including growth. And the concern that’s in the market, and we have seen how inverted the curve remains, is that we may end up having the Fed tip us into recession," El-Erian told CNBC. Also Read: Best Penny Stocks On Thursday, major Wall Street indices closed in the green on Thursday after Treasury yields dropped from earlier highs following comments from a Federal Reserve offici

Charlie Bilello, Chief Market Strategist at CPI Wealth, pointed out that the famed 60/40 portfolio comprised of U.S. stocks and bonds is currently at a 14-month drawdown. "A 60/40 Portfolio of U.S. stocks/bonds is currently in a 14-month drawdown, 14% below its all-time high," Bilello tweeted. Also Read: How To Buy Treasury Bonds The standard portfolio where an investor puts 60% of their investible sum into equities and 40% in bonds is generally considered a prudent diversification. However, in the current economic environment, the portfolio doesn't seem to be working. Equity markets have been volatile this year as strong economic data, higher-than-expected inflation and a tight

Euro Pacific Capital Chief Economist Peter Schiff conducted a poll on Twitter, asking what the Federal Reserve would do if inflation remains well above the 2% target but higher interest rates cause another financial crisis. "Will the Fed chicken out and pivot, sending the inflation rate to new highs, or will it hang tough and let the crisis play out naturally," Schiff asked in a poll he conducted on Twitter. Also Read: How To Invest In Startups Interestingly, 64.7% of participants voted that the Fed would “chicken out” which will cause price rises to continue and hit new highs. Only 35.3% of participants believe the central bank would hang tough. What will the #Fed do if higher