Displaying items by tag: volatility

With the waters of volatility in the banking sector taking five – or, perhaps, 10 – the market’s turning its sights to some incomplete biz: disinflation, according to swissre.com.

Due to “decisive government and central bank actions,” what might have ballooned into a systemic financial sector crises – on both sides of the Atlantic, at that -- which would have put a damper on merging markets, was sidestepped. But stemming from stubborn core inflation pressures and tight labor markets within advanced economies, in May, the Fed and European Central Bank’s expected to hike policy rates.

Meantime, call it a game of adjustments.

In the first quarter, Gateway, which is focused on low-volatility equity investments, made adjustments in its portfolio, according to barrons.com.

The low down: it wielded the scissors, shoring its stake Apple stock and putting the old slash on its General Electric investment. At the same time, it purchased Altria Group stock (MO). The stock trades – as well as others -- were disclosed by Gateway in a form it filed with the Securities and Exchange Commission.

Recent volatility in the financial market? Sure enough. Pressure on spreads? Two for two. 

Yet, the medium term outlook for fixed income hasn’t deviated and remains relatively high, according to sageadvisory.com.

Hearty returns in core fixed come are fueled by factors such as attractive yield carry, a weak growth picture and the wraps put on the Fed cycle

And is the subject of taxes ever far behind? 

Prompted by a change in tax laws, last month, investors flocked to park their dollars in fixed income funds, according to ithought.co.in. That said, merit played no role.

In 2023, investors should find out, for example, whether the time is right to put money in fixed income. That would be a yes, the site stated. Equity, gold, real estate or fixed income are the options investors have. For equity in so much as performance is concerned, 2023 will be rough and tumble. On the other hand, participation will score big. The best performing asset of FY22-23’s gold. For investors, rather than dwelling on what went down last year, all eyes should be on taking stock of performance down the line.

Volatility? Um, okay. What of it?

After all, yeah, sure, while it generates risk, it also can create opportunity, according to lazardassetmanagement.com. Meaning, rather than trying to circumvent it, fixed income investors should embrace it. Why exactly, you ponder? It’s because they could reap rewards from, like a scene straight out of the Wild West, looking it in the eye. No blinking, either.

In this atypical environment, the firm believes investors might want to abandon a passive mindset and chew over investments that leave “plain vanilla” bonds in the dust. Investors can come across fixed income solutions that have the potential to set up portfolios for the longer run by being creative and active. And don’t forget, mind you, diversifying globally.

Earlier in the year, etftrends.com reported that, potentially, fixed income classes could dispense better total return performance in 2023. That’s in the aftermath of a year riddled in negative returns that not only reset valuations – but to levels that seem more attractive. It’s especially so among investors with a more prolonged timeline.  

For bond traders, 2023 has been one of the most volatile years in recent decades. It’s not entirely surprising given the various forces impacting the market such as inflation, a hawkish Fed, a slowing economy, and significant strains to the banking system.

In a Bloomberg article, Michael Mackenzie and Liz McMormick discussed reasons why these conditions will persist for the remainder of the year. In response, investors are looking to remain nimble and flexible especially given wide swings and a risky environment. 

Bond traders are expecting this uncertainty to continue as long as the Fed continues its hiking cycle and gets clear when it will start cutting rates. A major factor in Treasury inflows has been the slowing economy as recession fears increase, however the labor market continues to add jobs, and the economy continues to expand. Additionally, the recent spate of bank failures and financial stress also was supportive of Treasury inflows. 

Maybe the best illustration of the volatility is the 2-Year Treasury yield which got as high as 5.1%, following Fed Chair Powell’s hawkish comments. And. it got as low as 3.6% a few days later amid the failure of Silicon Valley Bank.

Finsum: The bond market has experienced incredible volatility in Q1. However, odds are that this volatility will continue all year. 

Seems that fixed income’s calling and it might pay to presume it’s not someone hawking insurance.

In 2023, it “has a huge potential” to dispense strong returns, according to Joanna Gallegos, co founder of BondBloxx Investment Management, reported yahoo.com, which carried an article earlier in the year which originally was published on ETFTrends.com. That said, it remains a good idea to be cautious.

Worth investing time in, especially: high yield corporate debt. That’s because they offer high yields and it’s projected by Bond Boxx that corporate defaults, compared to their long term average, will remain lower.

Tormented by hyper interest rate spikes that culminated in spiraling bonds yields, 2022 was one of the worse for fixed income, added money.usnews.com.

It sparked a deep dive of price of fixed income assets, and longer duration issues in particular.  

This year? Oh how the page turns. Paul Malloy, head of municipals at Vanguard, said "the 2023 outlook is drastically different than the position we found ourselves in last year,” Indeed, fixed-income investors started 2022 with a near-zero federal funds rate, but are now entering 2023 with a rate of 4%-plus. According to Malloy, the Federal Reserve "front-loaded" much of its policy tightening this cycle and is likely nearing a wrap.

“The fixed income asset class has a huge potential to deliver better performance in 2023,” Gallegos said on CNBC’s “Worldwide Exchange.” “We’re at new rate levels we haven’t seen in over a decade plus, and so, you’re really resetting valuations in a way that are very attractive.”