STIP - Floating-Rate And Junk Bonds Lead Fixed Income So Far In 2024

2024-03-27 10:40:00 ET

Summary

• The bond market has struggled to fully recover from the Federal Reserve’s aggressive run of interest rate hikes in 2022-2023, but pockets of strength remain conspicuous.
• The headwind for bonds generally is closely linked to ongoing uncertainty about when the Fed will start cutting interest rates.
• Fed funds futures this morning estimate a roughly 70% probability that the central bank will trim its current 5.25-5.50% target rate on June 12.

The bond market has struggled to fully recover from the Federal Reserve's aggressive run of interest rate hikes in 2022-2023, but pockets of strength remain conspicuous. Within the fixed-income space, a degree of relative resilience persists for floating-rate securities, low-rated loan securities and junk bonds, based on year-to-date performance via a set of ETFs through Tuesday's close (Mar. 26)....

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