2024-03-13 23:53:54 ET
Summary
- Schwab 5-10 Year Corporate Bond ETF is a high duration ETF focused on high-grade corporate credit.
- The portfolio is mostly comprised of industrials and financials, with half of the bonds rated BBB and the other half rated A.
- The maturity walls in 2024 and 2025 may impact corporate income and credit spreads which could dampen the rate cutting plans of the Fed, as credit spreads are historically low.
- We believe that markets are not sufficiently addressing the possibility of the maturity walls enhancing Fed policy transmission, and is likely the primary reason why the Fed is even considering cuts.
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SCHI: Taking Issue With Credit Spreads