Bill Gross’s view on short-term interest rates
Gross believes this situation could lead to the next recession in the global economy (ACWI). He believes a gradual rate hike is good for the economy since zero interest rates inflated asset prices and economic growth. It’s difficult to achieve real economic growth during an ultra-low interest rate environment. He thinks the central banks should implement their strategies very carefully and cautiously. A gradual rate hike is also appropriate when economies are showing stronger movements.
Investing in high-yield bonds and short-term bond ETFs
Performances of high-yield bonds and short-term bond ETFs
Some high-yield bond ETFs such as the iShares 0-5 Year High Yield Corporate Bond (SHYG), the SPDR Barclays Short Term High Yield Bond (SJNK), the PowerShares Senior Loan ETF (BKLN), and the PIMCO 0-5 Year High Yield Corporate Bond ETF (HYS) returned 3.5%, 3.5%, 0.75%, and 3.8%, respectively, on a YTD (year-to-date) basis as of July 20, 2017.
The iShares 1-3 Year Treasury Bond (SHY), which tracks the performances of short-term duration bonds, rose nearly 0.39% on a YTD basis as of July 20, 2017.
You also may be interested in reading Ray Dalio to Investors: “Keep Dancing but Closer to the Exit.”