2024-02-11 19:17:23 ET
Summary
- Several trends are having a significant impact on the broader bond market.
- Rates are at their highest levels in decades across bond sub-asset classes.
- The Federal Reserve is expected to cut rates in the coming months.
- Longer-term bonds yield less than shorter-term securities as investors anticipate rate cuts.
- Credit spreads have narrowed even as default rates rise.
I've covered some of the more important trends impacting bonds and bond ETFs these past few years, as Federal Reserve hikes have led to wild swings in interest rates and broader bond market conditions. Last time I covered these issues for the Vanguard Total Bond Market Index Fund ETF ( BND ), nominal rates were high, real rates were low, the yield curve was inverted, and credit spreads were slightly narrower than average. Some of these trends have reversed course, some remain broadly the same. Right now, the following stands out about bond market conditions.
Rates are at their highest levels in decades, across bond sub-asset classes.
The Federal Reserve will likely cut rates in the coming months. Under current guidance, rates would remain at above-average levels for several years....
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For further details see:
The Fed Is Poised To Cut Rates: What Bond And BND Investors Need To Know