Finance
Investors should consider Bond ETFs before Fed cuts: BondBloxx COO
Investors may want to stick with fixed income investments — possibly even adding to them — despite the Federal Reserve’s intention to cut interest rates this year.
“Your biggest mistake could be rushing back into equities before you’re considering all these opportunities in fixed income,” BondBloxx co-founder and COO Joanna Gallegos told CNBC’s “ETF Edge” this week.
Though off its peak of more than 5% in late 2023, the benchmark 10-year U.S. Treasury note yield has reaccelerated over the past month. As of Thursday’s market close, the yield was hovering near 4.31%. It touched 4.429% on Wednesday, a high for this year.
To manage interest rate volatility effectively, Gallegos suggests investors look to exchange-traded funds focused on intermediate term bonds.
“If you go into the intermediate space, whether it’s in credit or within Treasurys, you’re taking on some risk and you’re going to benefit from a total return tail wind when rates go down,” she said.
Morgan Stanley Investment Management’s Tony Rochte recommends a similar medium-term strategy with vehicles like the Eaton Vance Total Return Bond ETF (EVTR) under his firm’s management.
“It’s right now a 6-year duration, about a 6.6% yield,” the firm’s global head of ETFs said in the same interview. “It’s a best ideas portfolio.”
Rochte also pointed to municipal bond funds, like the Eaton Vance Short Duration Municipal Income ETF (EVSM), for income-generating opportunities.
“We also converted a municipal bond mutual fund last Monday here at the NYSE to an ETF, symbol EVSM, and that’s a municipal. Again, 3 1/2% yield, almost a 6% taxable equivalent yield. So these are very attractive rates in the current environment.”
Finance
Ron Baron sees Tesla worth $5 trillion in 10 years, says Musk eyeing $30 trillion value one day
Pictured here is a Shanghai development under construction on Nov. 4, 2024.
Cfoto | Future Publishing | Getty Images
BEIJING — China’s National Bureau of Statistics is scheduled Friday to release retail sales, industrial production and fixed-asset investment data for October.
Retail sales are expected to have picked up to 3.8% year-on-year growth, according to analysts polled by Reuters, after rising by 3.2% in September.
Industrial production was forecast to have risen by 5.6%, the poll showed, up from 5.4% the prior month.
Fixed-asset investment, reported on a year-to-date basis, was anticipated to post 3.5% growth from a year ago, up from the 3.4% pace in September, according to the poll.
Chinese authorities have ramped up stimulus announcements since late September, fueling a stock rally. The central bank has cut interest rates and extended existing real estate support.
On the fiscal front, the Ministry of Finance last week announced a five-year 10 trillion yuan ($1.4 trillion) program to address local government debt problems, and hinted more fiscal support could come next year.
Manufacturing surveys indicated a pickup in activity last month, while exports surged at their fastest pace in more than a year.
Imports, however, fell as domestic demand remained soft. The core consumer price index that strips out more volatile food and energy prices rose by 0.2% in October from a year ago, modestly better than the 0.1% increase seen in September.
Beyond a trade-in program to encourage car and home appliance sales, Beijing’s stimulus measures have not targeted consumers directly.
China’s Golden Week holiday in early October affirmed a trend in more cautious consumer spending, but several consultants said that sales during the Singles Day shopping festival, which recently ended, had beat low expectations.
The country’s gross domestic product in the first three quarters of the year grew by 4.8%. The country has set a target of around 5% growth for the year.
This is a developing story. Please check back later for updates.
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