Our 29 ideas range from low-risk municipal bonds to high-risk mortgage REITs.
INVESTING IN BONDS FEELS LIKE SWIMMING against a powerful tide these days. Yields have risen sharply since Election Day, pushing bond prices down. The dynamic has made it tough to earn a positive return in high-grade bonds, which may suffer additional price declines.
The problem is that a long era of ultralow interest rates appears to have ended. The Federal Reserve has started raising short-term rates, and it is winding down its program of buying government bonds to help prop up prices (and keep yields down). Donald Trump’s election as president, meanwhile, has revived the prospect of stronger economic growth and inflation, which would erode the value of bonds and their fixed-income payments. Already, the yield of the benchmark 10-year Treasury note has climbed from 1.8% before Election Day to 2.4% today, a huge spike in a brief span. Kiplinger forecasts that 10-year Treasury yields will be at 3% by year-end. That almost certainly means more pain ahead for holders of high-quality bonds. “We’re concerned that rates will continue to rise and returns on bonds will be low to negative,” says Laird Landmann, co-director of fixed income at TCW, which runs TCW and Met West bond funds.
Bu hikaye Kiplinger's Personal Finance dergisinin June 2017 sayısından alınmıştır.
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Bu hikaye Kiplinger's Personal Finance dergisinin June 2017 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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