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BONDS The week that was....w/e December 13, 2024..... Bond NAV's PINCH your nose, avoid the SMELL
Observations: * Since 03/2022 I posted many times that treasuries and high-rated funds are not the place to be. You get higher volatility + lower performance. * The analysts said last year that we will have 6-7 rate cuts in 2024. Not even close. * Listen to the Fed: we are going to keep rates higher than expected, be causious, and lower rates slowly; we must be sure inflation is low and stays low, and it's data dependent. * Since 2023 I posted: low duration, high yield, lower-rated bonds, and smoother charts is where you want to be.
Several funds that follow the above Easy choice for LT hold = CBLDX+RSIIX RCRIX SCFZX CLOZ SEMMX DBLIX
With the inflation being sticky, it is likely the rate will stay higher and longer with fewer cuts in 2025. One pundit mentioned there may be no cut next year and one or two cut in 2026.
Right, no one can say what will definitely happen, not even the FED--- until they see what's going on. Like Gretsky: chase the puck to where it's GOING to be, next; not where it is at the moment.
I have the suspicion that inflation will be difficult to bring down much further, unless a recession occurs. In that case, fewer cuts, and stretched over a longer period of time, is what's to be expected. NOT acting upon that, but upon the simple desire to reduce risk and leave a disappointing fund, my recent switch into PRCFX (effective today, when Chucky gets around to it) has brought my equity position down to 42% of total. (Bonds = 48%. The "cash" and "other" stuff is in the hands of the Portfolio Managers of my funds.)
All the above being said: rates might stay the same but chances of rates going higher? Big leap of faith? I can see higher for longer but I don't see higher than today. UNLESS tariffs and immigration policy causes higher inflation.
MMF - checking at local bank,BMO, dropped for the second time in three months. Rate went from 2.?? -1.745 1.547. Time to move RMD , which went there by my error!
What sounds appealing on the campaign trail will bring about unintended consequences. Even Giroux said on the recent WealthTrack interview that tariffs and immigration will bring inflationary pressure. Who will pay the tariffs in the end? Likely the buyers will bear higher import cost and pass that onto the consumers like you and me. Same goes to agricultural products with fewer farm workers legal or not.
Comments
* Since 03/2022 I posted many times that treasuries and high-rated funds are not the place to be. You get higher volatility + lower performance.
* The analysts said last year that we will have 6-7 rate cuts in 2024. Not even close.
* Listen to the Fed: we are going to keep rates higher than expected, be causious, and lower rates slowly; we must be sure inflation is low and stays low, and it's data dependent.
* Since 2023 I posted: low duration, high yield, lower-rated bonds, and smoother charts is where you want to be.
Several funds that follow the above
Easy choice for LT hold = CBLDX+RSIIX
RCRIX
SCFZX
CLOZ
SEMMX
DBLIX
Chart (https://schrts.co/eQFWwSdf)
I have the suspicion that inflation will be difficult to bring down much further, unless a recession occurs. In that case, fewer cuts, and stretched over a longer period of time, is what's to be expected. NOT acting upon that, but upon the simple desire to reduce risk and leave a disappointing fund, my recent switch into PRCFX (effective today, when Chucky gets around to it) has brought my equity position down to 42% of total. (Bonds = 48%. The "cash" and "other" stuff is in the hands of the Portfolio Managers of my funds.)
Time to move RMD , which went there by my error!