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Bonds Holding Up, But Playbook Is Changing

Observant1
edited March 23 in Other Investing
Barron's article suggests focusing on high-quality bonds now instead of junk bonds.
The S&P 500 was down more than 8% from its peak on Feb 19 while AGG returned
~1.4% and TLT returned ~3.2% during this period. "The ICE BofA US High Yield Index Option-Adjusted Spread
jumped to 3.23% Tuesday from 2.68% when the stock market peaked Feb. 19 according to the St. Louis Fed."
This has led to losses for junk bond holders but spreads are still narrow on some risky bonds.
The Fed's dot-plot graph suggests two interest-rate cuts this year which could accelerate bond returns.
Growth concerns have now superceded inflation concerns in the Treasury market.

https://www.msn.com/en-us/money/markets/bonds-are-holding-up-but-the-playbook-is-changing/ar-AA1BfTXl

Comments

  • Sven
    @Observant1, the recent Barron’s article on Ivascyn and Murata’s PIMIX also describes their move to higher quality debts (he likes agency and mortgage-backed bonds) and reduced junk bonds. Additionally, moving from 0.8 to 4.7 years in duration is due ti the flattening yield curve. Here is an excerpt from yogibb,
    FUNDS. Ivascyn (and Murata) of multisector giant PONAX / PIMIX are loading up on agency MBS and TIPS but reducing exposure to corporates, nonagency MBS (a Pimco specialty) and HY. Credit spreads are tight, stocks are (still) expensive, so it's focusing on credit quality. The yield-curve is almost flat. He doesn’t expect high inflation or recession and has increased Fund duration a bit. Fund is well positioned for 5-yr timeframe and has a generous distribution. It’s unclear how (or, if) the Administration will calibrate policies with economic data and market signals. (etf cousin is PYLD, riskier CEF cousins are indefinite-term PDI and limited-term PDO, PAXS.) (By @LewisBraham at MFO).
    https://www.barrons.com/articles/top-bond-fund-manager-buying-now-2168a117?refsec=funds&mod=topics_funds
    The article showed the sector changes over 4 years.
  • Observant1
    edited March 23
    @Sven,

    Thanks for providing information regarding bond positioning from these well-respected managers!
  • Sven
    You are welcome. I first read the article in Barrons, then it appeared in Apple News. Perhaps for Apple News subscribers, they can get access to it. Dan Ivasyn seldom provides interview unlike Bill Gross. Thanks to @Lewis Braham, the article is well written with detailed changes made in PIMIX.
    https://apple.news/Ahu9XYJvrRYamEKy8Bf2c8Q
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