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Bond Market Outlook: Higher Rates and Known Unknowns

johnNjohnN
in The Bullpen
http://www.schwab.com/public/schwab/nn/articles/Bond-Market-Outlook-Higher-Rates-and-Known-Unknowns

Bond Market Outlook: Higher Rates and Known Unknowns
By
Kathy A. Jones
- December 1, 2016
Key Points

The prospect of fiscal stimulus and tax reform under the new administration is driving bond yields higher, and we believe the upward trend is likely to continue into 2017.
However, there are many “known unknowns” about policy that could affect the outlook for investors.
Trade tariffs and/or a stronger dollar could slow growth and cool inflation, tempering the rise in bond yields.
We suggest investors take a cautious approach to the bond market, focusing on high quality domestic bonds and keeping the average portfolio duration in the short to intermediate term until there is more clarity.
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