Senior Solutions Specialist – ETF Model Portfolios
Due to tightness in the U.S. labor markets, a number of investors are worried we will see inflation pressures. We have seen a surge of inflows toward U.S. inflation-protected bonds in the last six months as a result of these macro drivers. But is that the best approach?
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As interest rates rise, bond portfolios will generally lose value. In response, investors have shifted to cash or cash-like positions, such as short-term Treasuries , while they wait to allocate with...
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In anticipation of drastic or unidirectional interest rate movements, bond investors typically choose to either dial up or down their duration profile. One common way to do this is using U.S. Treasury futures to hedge duration in a portfolio of high-yield or investment-grade bonds. However, for many investors, constantly adjusting the hedge ratios for a portfolio can be cumbersome and out of their comfort zone.
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Setting aside what a Trump victory could mean for the social morale of the country, his presidency may have some positive economic effects, namely through tax cuts and infrastructure. While infrastructure spending is a commonality between both candidates’ policy agendas, Trump’s comes paired with tax cuts, which could act as a “steroid” to the markets and, in turn, could extend the bull market and potentially take it to new highs.
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On October 1, the Chinese renminbi (denominated in yuan) became part of the Special Drawing Right (SDR) of the International Monetary Fund. This decision and its implementation are historic, as the renminbi became the first emerging market currency to be incorporated into the basket.
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2016 has been a volatile year for many asset classes. During times like these, it is not unusual for safe-haven assets, such as U.S. investment-grade fixed income, to experience outsized total returns. However, this rally is not just about a risk-off scenario leading to a run-up in bond prices.
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