How the Largest Bond Funds Did in Q2 2025

Comments

• davidrmoran

  July 3

  a likely future
  
  https://www.nytimes.com/2025/06/27/opinion/trump-budget-big-beautiful-bill.html
• Sven

  July 3

  @davidrmoran, the article in behind a paywall. Can you provide a summary? Thank you
• davidrmoran

  July 3

  You of all people should have a subscription
  
  https://www.nytimes.com/2025/06/27/opinion/trump-budget-big-beautiful-bill.html?unlocked_article_code=1.Tk8.wSgs.OFKFM1hFVG9H&smid=url-share
• AndyJ

  July 3 edited July 3

  This clip is especially noteworthy with the designated talking heads out in public with knives out for the CBO. The contention that the Damnable Ugly Bill won't raise the debt is total insanity; who could really believe that crap?

  Because the Trump administration and House Republicans have savaged the C.B.O.’s analysis, it is worth adding that Phillip Swagel, who heads the office, is a Republican reappointed at the behest of House Republicans just two years ago. At the time, they praised his “objectivity and integrity.” The C.B.O.’s analysis closely resembles independent assessments by the Penn Wharton Budget Model, the Yale Budget Lab and the Tax Foundation.
• Observant1

  July 3 edited July 3

  deleted
• hank

  July 3

  
• Derf

  July 3

  @hank With whom are you conversing with?
  Old_Joe?
• DrVenture

  July 3

  davidrmoran said:

  You of all people should have a subscription
  
  https://www.nytimes.com/2025/06/27/opinion/trump-budget-big-beautiful-bill.html?unlocked_article_code=1.Tk8.wSgs.OFKFM1hFVG9H&smid=url-share

  This article should be required reading. People should be compelled to discuss it and debate it or even try to refute it, in an honest fashion
  
  "The Republican Party controls both houses of Congress and the White House. Mr. Trump and his allies have the power to deliver a fiscally responsible plan. Instead, they are playing make-believe.
  
  A small number of Senate Republicans have expressed reservations about this situation. Senator Rick Scott of Florida has said the projected growth in the debt is “fiscal insanity,” and Senator Ron Johnson of Wisconsin has called it “unacceptable.” They’re right about that much. The refusal to confront America’s fiscal problems has a price, and it is rising rapidly."
  
  
• Observant1

  July 3 edited July 3

  During the past 45 years, Congressional Republicans were fiscally conservative
  only when Democrats controlled the executive branch.
  Oh, how they wailed obsessingly about fiscal rectitude!
• Observant1

  July 3 edited July 3

  From the NY Times article:
  
  "Three times in the past half-century, Republicans have enacted large tax cuts
  that necessitated significant increases in federal borrowing.
  Each time they insisted the cuts would drive economic growth, even claiming
  that the expansion would be so large that the government would collect more tax revenue.
  Each time, they’ve been proved wrong."
  
  "Mr. Trump’s bill would be the fourth iteration of this failed experiment,
  and some Republicans are still retailing the same fantasies about the consequences.
  'This will reduce the deficit, not increase it,' Senator John Thune of South Dakota,
  the Senate majority leader, said last week. That is simply false."
• Sven

  July 3

  @davidrmoran, thank you for linking the article for everyone’s reading. In has already generated a healthy discussion, thanks to you.
  
  While I personally don’t subscribe to New York Times, but I have access through our local public library.
  
  @Observant1 and @DrVenture, what investment opportunities do you see?
  
• DrVenture

  July 4 edited July 4

  I am adding cautiously to INTL large caps. Starting in Jan 2025, I pulled back heavily on riskier assets, after riding the 2023/2024 equity wave. But, this rationale was twofold. I needed to pull back due to impending retirement (2026). And the tariff chaos was well-telegraphed. I added about 60%, of what I pulled out, back to equities on April 8, when the WH signaled they were backing down on harsh rhetoric and tariff rates. This got me to where I am now (58/15/27). I have added to PIMIX and PFN and PDO in the last month, as well, on hopes rates are really going to tick down by the 4th quarter.
  
  This is all in regards to the short and medium term.
  
  Obviously, the debt/deficit and inflation are on people's minds right now. The long term. And we KNOW that Trump will insert his agent into the FED in mid-2026 and try to push rates down significantly. I believe this has two implications, That inflation may gain a foothold and could become a problem. And that it will probably help existing bond fund prices.
  
  There are a lot of plates spinning. Caution and FOMO are battling it out. My totally unqualified view is that the second half of 2025 could be decent, IF jobs and inflation do not deteriorate too much. And if the FED cuts, the markets will be enthralled. Rate cuts should help tech, as they use debt heavily to finance growth. This, and the tight labor market might, offset any job losses. Inflation is the wild card, How does the FED deal with inflation, should it exceed 3%, and they have already cut rates? Do they let it run? Does a new Trump FED appointee appease, or do the right thing? From an investing standpoint, how do bonds and stocks react if the FED is forced to raise rates. Or fails to do so in the face of inflation?
  
  As always, I am open to respectful disagreement and alternative opinion. And healthy debate.
  
  
  
• Sven

  July 4 edited July 4

  @DrVenture, thank you for sharing. The falling dollar since Dec 2024 was concerning when it fallen 9% YTD. The question of whether the dollar remains as the world last resort have been brought up several times. The last downgrade by Moody due to increased deficit is alarming and it is getting worse, not better with the latest tax cut bill. Since late last year, we rebalanced from US to developed and emerging market aggressively and made considerable gains.
  
  With our retirement are coming up, we want to takes some equity risk of the table and focus on better multi-sector and foreign bonds, and not so much with treasury, especially long bond. In all cases, we are staying with short duration in light of inflation still lingering.
  
  My concerns are the following :
  1. Staginflation
  2. Can US continue to finance its deficient by selling long bonds ? Bessent said her can takes care of that.
  3. What will happen when on one would work on the fields and meat packing factories?
• hank

  July 4 edited July 4

  The (admittedly deplorable) Bill O’Riley has been insisting the stimulus from the big deficit is intended to prevent the economy from dipping into a major recession before the mid-terms. After that, ”Look out below”. Not intended as political commentary. Just attempting to explain the economics / motives behind what at first appears financial madness. Would I bet the ranch on O’Riley’s progmosis? Hell no.
• FD1000

  July 7 edited July 7

  Observant1 said:

  From the NY Times article:
  
  "Three times in the past half-century, Republicans have enacted large tax cuts
  that necessitated significant increases in federal borrowing.
  Each time they insisted the cuts would drive economic growth, even claiming
  that the expansion would be so large that the government would collect more tax revenue.
  Each time, they’ve been proved wrong."
  
  "Mr. Trump’s bill would be the fourth iteration of this failed experiment,
  and some Republicans are still retailing the same fantasies about the consequences.
  'This will reduce the deficit, not increase it,' Senator John Thune of South Dakota,
  the Senate majority leader, said last week. That is simply false."

  President Lyndon B. Johnson, Dem, cut taxes by a lot, about 20%, in 1964.
  
  https://en.m.wikipedia.org/wiki/Revenue_Act_of_1964
  
• Derf

  July 7

  What was the corporate tax rate reduction then as compared to now ?! OUCH!!
• DrVenture

  July 7 edited July 7

  Sven said:

  @DrVenture, thank you for sharing. The falling dollar since Dec 2024 was concerning when it fallen 9% YTD. The question of whether the dollar remains as the world last resort have been brought up several times. The last downgrade by Moody due to increased deficit is alarming and it is getting worse, not better with the latest tax cut bill. Since late last year, we rebalanced from US to developed and emerging market aggressively and made considerable gains.
  
  With our retirement are coming up, we want to takes some equity risk of the table and focus on better multi-sector and foreign bonds, and not so much with treasury, especially long bond. In all cases, we are staying with short duration in light of inflation still lingering.
  
  My concerns are the following :
  1. Staginflation
  2. Can US continue to finance its deficient by selling long bonds ? Bessent said her can takes care of that.
  3. What will happen when on one would work on the fields and meat packing factories?

  My opinion is very fungible, because a lot is based on changing circumstances. But, it sounds like we are in a similar position and have a similar approach. Some de-risking, and chasing returns where possible at the same time. One of the notions that has me on the fence is what is going to happen with rates.
  
  IMO, what happens in fields and meat-packing (and construction, and hospitality, and manufacturing) is that wages will come up significantly, to attract workers. Labor competition could get crazy. Irony adjacent is that so many were adamantly against minimum wage increases for so long, and now they embrace policies that make minimum wage efforts look negligible. Even air-conditioned jobs at McDonalds have gotten pricey, due to labor competition.
  
  I believe that the biggest issue will be that the workforce of agriculture may not exist at all in the places where it is needed. They are called "migrant workers" for a reason. They travel to where the work is. This is a very difficult life. Is there any amount of money that you can pay U.S. citizens to do this sort of hard work, live like that, and keep showing up? Federal bailouts may help the farmers survive in the short-term, but it will not get the food to people's tables. And food exports have always been a big part of balancing trade for us. For that to work you need a surplus of product. I believe that this administration will have to find a way to bring back the workers we need - a big, streamlined expansion of the H2A visa program. Which will still be very expensive, compared to what it costs now to bring in migrant labor off the books.
• DrVenture

  July 7

  The Johnson tax cuts multiplied the budget deficit by a 6x compared to two years earlier. taxes were raised again in 1969, by Nixon, which led to the last budget surplus until Clinton in 1998. The top income bracket was 90% before Johnson lowered it to 70% - a far different situation, than we are in now. Balance is often the key, either too much or too little is what can cause problems. Similar to rate hikes.
  
  Often people forget that party ideals change. Lincoln was a "Republican", who fought the South over issues such as slavery. But, in that scenario, the Republican Party was clearly the more liberal party at that time. The "Conservative" Party wanted to keep humans as property. The name is not as relevant as policy.
  
  By modern standards both Kennedy and Johnson had many conservative attributes. This is another topic where " a little knowledge" is dangerous and potentially misleading.