Vanguard Total Bond Market ETF

High-quality bonds can be an investor refuge when there’s market volatility. These securities provide relatively stable cash flows. The default probability is low.

Valuations are at the higher end of their historical range. Investors should avoid defensive sectors, which are highly sensitive to interest rate changes.

The Redbook Index released the same-store weekly data on Tuesday, March 11, 2014.

For the week ended March 15, retail same-store sales grew 0.7% and 1.5% week-on-week and year-on-year, respectively.

Dalio is worried about the long-term economic outlook, and he believes that the strengthening macroeconomic data, specifically wage growth and inflation, could encourage the Fed to continue its aggressive monetary policy.

As expected, the Federal Reserve increased the interest rate by 25 basis points after its June meeting, which concluded on June 13.

JOLTS (the “Job Openings and Labor Turnover” report) produces monthly estimates of job openings, hires, quits, layoffs and discharges, and other separations.

Potential new developments from the Fed include a suggestion by the subcommittee on communications that median values of policymakers’ projections be published.

The hottest topic for market players right now is the interest rate hike. Last week’s labor releases spurred the recovery. Many investors had thought the recovery was flagging.

When consumers can borrow at lower interest rates, they can afford to buy more goods and services, and the businesses that supply those goods and services can hire more people.

This week, markets will be looking at any clues revealing hints for the outcome of the Fed’s next Federal Open Market Committee Meeting (or FOMC) slated for March 18–19.

Weakness in the labor market means low interest rates. The US economy is gaining momentum with stellar growth rates in the last two quarters. It grew by 4.6% in 2Q14.

In its July meeting, the Federal Open Market Committee decided to maintain its target range for the federal funds rate at 1%–1.25%, in line with the market’s expectations.

Unconventional stimulus measures from central banks usually end up injecting liquidity in global financial markets. They’re especially relevant to emerging market economies.

Kocherlakota gave a presentation at the annual American Economic Association conference. He was firmly in favor of letting the Fed be free in its decision making.

A weaker euro could lead to inflation in Europe. The depreciation in the euro was initially due to the appreciation in the dollar.

While issuers’ activity waned last week, many investors continued to pore over the new issues that hit the corporate bond market (LQD).

Market participants were caught by surprise when they read that the Federal Open Market Committee’s members were concerned about slowing growth in the US economy during 1Q17.

A bond ETF is managed by a human (sometimes several). A common misconception about bond ETFs is that they simply hold all the securities in the index they track.

While volatility fell over the course of August, the VIX’s daily average for last month was approximately 15% higher than its average over the previous three months.

Bond yields and prices move in opposite directions. Due to the increase in yields last week, returns on investment-grade bonds were negative.

Legendary value investor Bill Miller has an optimistic view on the equity market.

Billionaire investor and bond guru Jeffrey Gundlach also shared his view on bond yields in an interview with CNBC.

In this series, we’ll analyze Fed members’ comments in June 2017 to better understand their outlooks on the US economy and how they justify their hawkish or dovish stances.

Today, another round of trade talks started in Beijing.

This article considers the possibility of rising rates and the case for taking a bearish view on bond prices.

On October 3, US bond yields (BND) soared due to a bond sell-off. The sell-off continued on October 4, though at a slower pace.

The Fed currently uses considerable staff resources in monitoring financial markets for risks arising from financial instability.

Most FOMC participants indicated that they preferred to consider a possible rate hike on a meeting-by-meeting basis—without providing any hints about the timing of a rate hike.

I’ve discussed on The Blog how an investor can think of the federal funds rate and QE as a gas pedal. Sometimes it’s good to ease off a bit to limit the pace of acceleration.

The Fed, in its latest announcement, has further reduced its bond buying program to $55 billion a month, signalling that the improvement in the economy is on track.

Even if we assume that green bonds don’t offer any significant premium over conventional bonds, there are many who believe in other noteworthy advantages of green investing.

Possibly the most important indicator for the debt markets going forward will be provided by Fed Chairman Janet Yellen’s semi-annual monetary policy testimony.

The Fed also embarked on three rounds of quantitative easing (or QE). Now, the Fed is looking to decrease the size of its bloated balance sheet.

Easier borrowing conditions stimulate business investment among firms. Higher investment would generate employment and benefit firms’ revenues and profits.

Home prices rebounded 0.8% in December after easing 0.1% the month before. Excluding some monthly volatility, home prices have been in an uptrend.

Few economic releases elicit as much reaction from both the stock (IVV) and bond (BND) markets as the employment reports issued by Automatic Data Processing (ADP) and the Bureau of Labor Statistics (the BLS).

U.S. investment-grade corporate bonds (LQD) weathered higher market volatility well in 2014. They’ve been a steady source of returns for investors.

An alternative investment is an investment in asset classes other than stocks, bonds, and cash that seeks to provide a hedge against various market risks.

The Brexit referendum aftermath has translated to gains for certain hedge funds, while washing away earlier gains for others.

Most steel stocks continue to trade near 52-week lows. U.S. Steel Corporation (X) has fallen more than 70% year-to-date.

A liquid alternative ETF, the ProShares Large Cap Core Plus ETF (CSM) tracks a long-short index of Credit Suisse 130/30.

iShares now offers 20 low-cost Core ETFs that are a great starting point to consider as core holdings for your portfolio.

Flows into investment-grade bond funds were positive last week. Investment-grade bond funds saw net inflows of $907.1 million during the week ending July 6.

Investors willing to take a little higher risk than what they find in Treasuries, if they’re in search of higher returns, can consider investing in investment-grade corporate bonds.

Ray Dalio increased his firm’s holdings in the iShares MSCI Brazil Capped ETF (EWZ) in 2Q16.

Flows into investment-grade bond funds (LQD) were negative in the week ending June 17. This was the second consecutive week witnessing outflows.

Investors could consider hedging their short-term duration risk (HYG: 3.98 years, JNK: 4.20 years) with a short position in longer-dated bonds.

Prominent bond investor Jeffrey Gundlach discussed the bond market’s performance and his expectations for the bond market in a recent interview.

The S&P 500 Index (SPY) is up more than 60% over the last five years, providing good evidence of the US stock market rally. More than $7.8 trillion worth of funds is benchmarked to the index.

When financial intermediaries allocate funds, they assess the risks and returns that come from various risky claims. Intermediaries help allocate resources and risks throughout the economy. Financial intermediation can result in concentrated risks. The risks increase the financial system’s fragile state. These risks are called systemic risks.

Total municipal bond issuance in the first quarter of 2014, was $62.6 billion, down ~26% from the $84.3 billion issued in the first quarter of 2013.

Volatility, or the index commonly known as the “fear factor,” surged over 34% to 17.03 in the week ending August 1—this was the highest level in almost four months.

Even among those who have jobs, the fraction of people working part-time but who would like to work more hours is higher than the historical average.

For those who want a little more adventure on their menu, there’s always the option of adding some unique flavors like spicy kebabs. This is the equivalent of adding some emerging markets fixed income to your bond portfolio.

Monetary policy has been one of the main catalysts of this bull market. These returns were mainly aided by the ultra easy monetary policy.

The Fed’s main policy tool, the funds rate, has been at near zero levels since December, 2008.

This article considers the trade-offs between high-quality, low-yielding fixed income opportunities and lower-quality higher yields in the current improving economic environment.

Tepper thinks that the bond market’s (BND) performance is a good indicator to analyze the equity market’s (QQQ) performance.

This article takes a closer look at the changes in the discouraged worker data and considers the implications for fixed income investors.

Secondary market activity in high yield debt mutual funds High yield debt (HYG) mutual funds recorded their second consecutive weekly inflow. Net flows into junk bond (JNK) funds came in at ~$1.6 billion in the week ending October 31. Net flows into high yield bond (PHB) mutual funds are down by ~$2.3 billion so far […]

The improving economy still faces long-term structural issues like slow wage growth, below-trend consumption and a shrinking labor force participation rate.

Bill Gross expressed his views on the markets and on the Fed’s decision to delay the rate hike in his Investment Outlook October 2015.

High yield bonds have come under pressure lately, and as a result, are now looking relatively attractive. Spreads recently widened out to the highest level in a year.

Bill Gross thinks the central banks should implement their strategies very carefully and cautiously in this scenario.

The CPI and PCE are both important indicators of U.S. inflation. CPI is more important from an individual perspective, while PCE is more important for monetary policy.

Walgreens Boots Alliance (WBA) issued Baa2/BBB rated high-grade bonds worth $6.0 billion through five parts on May 26.

The Treasury’s newest issuance of floating rate notes, or FRNs, on January 29, commanded immense investor interest. The $15 billion issue received bids for 5.67 times the issue amount.

While the short duration aspect of both JNK and HYG might seem attractive to investors wary of rising rates, investors should bear in mind that both HYG and JNK also have significant credit risk.

As the Fed moves toward a gradual, continued rate hike process, it’s important for investors to keep an eye on the other central banks.

In the coming months, yields are likely to trend higher as the Fed moves closer to ending the taper and tightening monetary policy.

The difference between five-year and 30-year Treasury (TLT) yields narrowed to 142 basis points (or bps) on September 26. This is the narrowest it has been since January 16, 2009.

It’s important to note that higher real yields, not rising inflation, are driving today’s higher nominal yields as investors are demanding more compensation for holding bonds

Continued from Part 2 Because Bernanke will step down, there’s great speculation on who will replace him So who is it likely to be the next Bernanke? The case for Summers Between the two, Summers certainly has more excitement building around him than Yellen. Summers also has Wall Street credibility—at least more so than Yellen. […]

When uncertainty rises, equity markets become volatile, and bond spreads rise. Brexit is likely to have a similar effect on capital markets.

In December 2008, when the U.S. economy entered its dreadful recessionary phase, the Federal Reserve (or Fed) reduced the federal funds rate to nearly zero in order to stimulate household and business spending and support economic recovery.

Private and government construction both reported declines. The construction value chain has a multiplier effect on other sectors of the economy, and can significantly impact both stock and bond markets.

Most investors focus much of their time on picking assets that have the potential to win. However, limiting downside risk is just as important.

The rates for capital gains tax depend on the asset’s holding period. If the holding period is less than one year, short-term capital gains tax is payable.

Investors are flocking to government bonds (BND) of developed markets, which is causing downward pressure on interest rates.

Select areas of the EM debt sector hold good potential, as many of these countries exhibit low leverage levels and are currently funded through year-end.

U.S. inflation is not just a measure of growth and price pressure in the U.S. economy. It has more far-reaching consequences.

Being a large capitalist economy with relatively smoothly functioning markets, some degree of inequality is expected.

After rising sharply the previous week, the issuance for the high-yield bonds dropped to $8.6 billion for the week ending on May 16 compared to $10 billion for the week ending on May 9.

Last week, U.S. economic data covered a number of sectors, including housing, employment, manufacturing, and inflation. All three housing indicators released last week were positive, and initial jobless claims once again beat market expectations. The CPI for September came in at an annualized rate of ~1.7%, the fourth straight monthly decline.

In this series, we’ll analyze how different asset classes like bonds (BND) and global equities (VTI) reacted to last week’s central bank events.

Net foreign purchases of long-term securities came in at $19.4 billion.

The real estate sector (VNQ) has been lagging in performance in 2018. It’s seen a year-to-date loss of 6%.

Manufacturing growth appears to be steady in the Fifth District. Although new orders declined sharply month-on-month, firms remained upbeat for business prospects.

After stating her expectation of a rate hike, Yellen noted that robust household spending was helping US economic activity expand.

As we’ve seen, green bonds add value to the environment. But they can also provide you with diversification benefits.

The April retail sales report indicated that the gains were broad-based with nine of the 13 major categories moving higher during the month.

Low yields abroad could keep Treasury yields low. The ten-year US Treasury is currently yielding ~2.4%—compared to 0.9% of the German bund.

Treasury yields and U.S. investment-grade bond yields usually move in the same direction. Last week, corporate investment-grade bond yields followed cues from the U.S. Treasuries market. Treasury yields (TLT) had fallen over the week on higher demand for safe-haven securities. They also fell as a result of the European Central Bank’s (or ECB) dovish monetary policy stance.

The good news is that while the recovery has impressed few, it has been much better than the alternative we were all facing six years ago, and there is still time to avoid, or at least mitigate, the pending retirement crisis.

The Fed’s balance sheet size has bloated to $4.3 trillion as on May 14, 2014, compared to pre-crisis level of $870 billion seen on August 1, 2007.

Expectations for a stronger economic environment, business-friendly policies, less regulation for businesses, and policy reformation are driving the equity market (SPY) (QQQ).

This week, the Fed’s third Federal Open Market Committee (or FOMC) meeting of the year will be held on April 29–30—always a market-moving event.

Last week was strong in terms of issuance volumes in the primary capital markets. High-quality bond issuance touched $51.3 billion across 42 issues in the week ending November 7.

Jeffrey Gundlach expects 2019 to continue to be a volatile year. The last quarter of 2018 was quite volatile after a prolonged calm in the markets.