The rally in bonds since Fed Chair Powell’s pivot at the December FOMC meeting has been fully wiped out following recent economic data and a more hawkish than expected FOMC at the February meeting. 

Over the last month, forecasts for the timing and number of rate cuts in 2024 have been severely curtailed. Entering the year, many were looking for 6 rate cuts with the first one in spring. Now, the consensus forecast is for 3 cuts, starting in July. This is consistent with FOMC members’ dot plot at its last meeting.

The narrative is clearly changing with some chatter that the Fed may not cut at all. Prashant Newnaha, senior rates strategist at TD Securities Inc., noted that “January CPI is a game changer — the narrative that Fed disinflation provided scope for insurance cuts is clearly now on the chopping board. There is now a real risk that price pressures will begin to shift higher. The Fed can’t cut into this. This should provide momentum for further bond declines.”

Given these developments, Amy Xie Patrick, the head of income strategies at Pendal Group, favors corporate credit over Treasuries. She views the strong US economy as providing a tailwind to risky assets, while making Treasuries less attractive. 

Finsum: Bonds have erased their rally following the December FOMC meeting when Chair Powell signaled that rate cuts win 2024. Here are some of the drivers and thoughts from strategists. 

Bonds and stocks weakened following a stronger than expected January CPI report which led traders to reduce bets on the number of rate cuts in 2024. The 10Y Treasury yield climbed 15 basis points, while the 2Y yield was up 19 basis points. 

On a monthly basis, prices were up 0.3% vs expectations of 0.2%. Annually, there was an uptick at 3.1% vs expectations of 2.9%. Food and shelter prices were major contributors with gains of 0.4% and 0.6%, respectively. Along with the recent jobs report, the data undermined the notion that the Fed would be turning dovish later this year. The anticipation of a Fed pivot has been a major catalyst, fueling strength in equities and fixed income over the last couple of months. 

Instead, the status quo of ‘higher for longer’ remains. Some investors are now anticipating that the 10Y yield will rise further. According to Skyler Weinand, chief investment officer at Regan Capital, “Bond yields have not peaked, and we believe that a 10-year Treasury yield with a 5-handle is more likely than a 3-handle in 2024. Persistent inflation, full employment and strong growth may delay the Fed’s rate cuts.”

Finsum: Stocks and bonds declined as the January CPI came in hotter than expected. Fed futures showed traders reduced estimates for the number of rate cuts in 2024.

Any advisor who is serious about acquiring high net-worth clients’ needs a solid marketing strategy. This is because there is intense competition to land these clients, and it’s necessary to differentiate your services in the marketplace.

The first step is to clarify what exactly you are trying to accomplish with your marketing plan. This can include increasing awareness of your practice, building trust with prospects, branding, creating credibility, and highlighting your expertise and knowledge. 

Next, it’s essential to understand the needs, goals, and challenges of your target audience. Some themes that are likely to resonate with wealthy clients are areas like legacy planning, minimizing tax liabilities, or superior levels of service. 

Building authority and credibility is an important prerequisite when it comes to landing wealthy clients. Some ways to do this are through interviews with journalists, being a guest on a podcast or program, collaborating with other professionals, and building a following on social media by regularly sharing valuable information. 

During the process of converting a prospect into a client, advisors should ensure that all interactions with prospects and full of value with the intention to create trust. This starts from the first interaction with a client and should always remain a primary ingredient in every point of engagement.

Finsum: It’s quite competitive and difficult for advisors to land wealthy clients. Here are some tips on how to be successful.