2024-02-16 11:59:04 ET
Summary
- AGG's price per share is well below its historical values, causing, on average, the prices of the bonds that compose AGG to be below their nominal values.
- The high-interest rates with values that haven't been seen in 23 years are the consequence of the Fed's policy to fight inflation levels in the US.
- The Fed is close to achieving its 2% inflation target rate, and subsequently, the institution will reduce the interest rate. This reduction will cause an increase in the AGG market price.
- Since August 2023, there has been a decline in the Treasury yields because market participants anticipate a reduction in the federal funds rate.
Investment Thesis
This is a good moment to buy the iShares Core U.S. Aggregate Bond ETF ( AGG ). Its price per share is quoting well below its historical values. Additionally, the Treasury yields have high values, and the Fed is close to achieving its 2% inflation target. When that happens, the Fed will start declining the interest rate, causing an increase in the price per share.
Overview
The United States economy is currently under a high-interest rate environment. In the last Fed meeting, the institution maintained interest rates between 4.25% and 4.50% , the highest level in over 23 years. High-interest rates can represent an opportunity; the key is to select financial instruments that benefit from that scenario. ...
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AGG: An ETF With An Excellent Opportunity For Low-Risk Investors