The Fed Hike: Are Bonds Back?

75 basis points: the biggest rate hike by the Federal Reserve since 1994 with additional aggressive moves expected. It looks like Fed Chair Jerome Powell is proving the naysayers wrong, who doubted he had the stuff to fight inflation. As influential Fed watcher Paul McCulley told WEALTHTRACK months ago Powell will “do whatever it takes” to fight inflation, just like Paul Volcker did in 1979/1980. Volcker succeeded, setting up conditions for the great bond bull market of the last 40 years but caused a serious recession to do it.
How do you manage through a cycle of rising interest rates and higher inflation? There aren't too many money managers who have that experience and have a track record of excellence through many different types of markets. This week’s guest does. She is Mary Ellen Stanek, Co-Chief Investment Officer of Baird Advisors.
Stanek was recently named Morningstar’s Outstanding Portfolio Manager of 2022 for her “disciplined and risk-aware approach, thoughtfully navigating various market environments,... and generating impressive absolute and risk-adjusted returns” in her 22 years at Baird.
I interviewed Stanek a few days before the Fed meeting but she was prepared for it. We talked about the need for the Fed to get more aggressive in word and deed - which they did, where we are in the interest rate cycle - early days yet, and why she says “bonds are back!”
WEALTHTRACK #1851 broadcast on Jun 17, 2022
More info: wealthtrack.com/morningstars-...
Related:
Investment legend Jeremy Grantham is known for his prescient forecasts of some major turning points in the markets over the years including his “epic bubble” characterization last year. He elaborated on the theme on WealthTrack saying that not only was the stock market trading in the stratosphere but so were the housing, commodity, and bond markets, the latter being the biggest bubble of them all.
• The Bull Market: A Bub...
Paul McCulley on Fed Rates: • Defeat Inflation Despi...
#bonds #thefed #interestrates #stocks #jeromepowell

[@RP-bk1sj]

Which Muni bond Etf or fund Mrs.Staneck is recommending? Thanks.

[@johnc4789]

We are told that a 4% tax exempt municipal bond yield is equivalent to 7% taxable bond yield (8% in New York & California). I believe Fed tax bracket plus most state taxes makes this untrue for typical investors. I'm in a state with no state income tax and assume state income tax rates are not that high.

[@Rational_Investor]

In regards to the baseball analogies...if the investment manager's "batting average" is as high as the highest in baseball (say ~0.400), that's still really poor for real-life investment results...lol

[@easterntechartists]

how so?

[@brijeshkukreja7411]

Bond! James Bond is baaaaack!

[@chessdad182]

Please don’t bring on a bitcoin person next week. Instead bring on Jim Grant to discuss bonds. We want Jim! We want Jim! Heh Heh. I don’t care about bitcoin. It is like someone talking about tulip bulbs. Every Jim Grant interview is interesting and very timely with the FED rate increase. Please bring on Jim!

[@michaelcap9550]

They did bring on a bitcoin person, unfortunately.

[@NYCguitarist]

Hear hear!

[@fredatlas4396]

Just stick to low cost passive bond funds as part of a diversified portfolio of equities & bonds. If you rebalance once a year you will sell high and buy low automatically

[@sfm9]

The Fed is still tightening into a rezession? They will soon backed down and the value of US-treasuries will go up (while the rates coming down).

[@brianhollenbeck8633]

😴zzzz sleep insurance. Love it.

[@gwalchirk2072]

Bonds suck when interest rates go up get real

[@zilver90000]

but market is stronger, bonds are going to go against the fed hikes

[@fredatlas4396]

You are right the value of bonds go down when the yields go up. But if yields go high enough bonds will be much cheaper to buy and you will get the higher yield, higher returns. And at some point in the future if yields come down the price of your onds will go up. Buy low, sell high

[@MrStevenjbalsamo]

@@fredatlas4396 The high yield will offset the price decline. The other alternative, stocks, can be more volatile.

[@NYCguitarist]

Bonds gonna kick ass

[@MartinSage]

YES, Bond futures are going to make money for Traders.$!! Especially in California. Longer Term Bond Futures will go Long as they approach maturity. Especially as the Fed raises interest rates which they must.
Liquidity is king now and more in the future.

[@flipper6480]

14:40

[@charleshughes2487]

Talk bonds or funds ….they are speechless …no solid answers …most expensive assets …Paul Volker declared war …