By love-89.com In light of recent market developments, we sought insights from industry experts regarding the current trends in the bond market. According to recent statistics, despite the pressures stemming from U.S. CPI and PPI data exceeding expectations, as well as the resurgence of oil prices due to instability in the Middle East, the overall fixed-income ETFs saw a net inflow of $55.583 billion in the past week. Notably, U.S. Treasury bonds attracted an impressive inflow of $52.806 billion, while European bonds gained $6.52 million. However, Asian bonds faced a downturn, with outflows totaling $315 million.
Investment-grade bond ETFs received substantial inflows amounting to $53.615 billion, whereas non-investment-grade bond ETFs experienced outflows of $32.3 million.
We spoke with Sanna Desai, a manager of the Franklin Templeton Global Investment Series Select Income Fund, who shared her outlook on the Federal Reserve’s interest rate policies. She anticipates that the total reduction in rates may be less than what officials projected in September, with the neutral rate eventually landing between 3.75% and 4%. Desai emphasized that market focus shouldn’t solely be on monetary policy. She pointed out that the U.S.’s long-term expansive fiscal policies will continue to boost economic performance in the coming years.
Additionally, with both presidential candidates in the November elections proposing policies that could exacerbate future fiscal deficits, there are significant implications for long-term U.S. Treasury bonds. Given the potential for rate cuts, Desai advises a strategy of holding bonds with maturities around five years to mitigate reinvestment risks associated with short-term bonds and the yield risks of long-term bonds. By adopting a neutral rate exposure alongside carefully selected corporate bond opportunities, investors can optimize their risk-adjusted return potential.