Bonds
Corporate bond yields are less attractive than those of U.S. Treasury bonds. Corporate debt is near all-time highs. We would take a smaller allocation to this sector until the risk-return profile improves.
Recently, U.S. Treasury yields were the highest in the developed world. This may draw international investors.
Municipal bonds are attractive for taxable investors. While the yields available are not as high as they were a few years ago, the tax benefits are still substantial.
We believe short term bonds should continue to do better than longer term bonds as long as the economy remains in the early fall season. However, we believe the economy will gradually shift to late fall or even winter, which our research indicates is a better time for longer term Treasury bonds.
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Negatives |
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Favorable risk/return profile for short term U.S. Treasury bonds |
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Corporate bonds are relatively unattractive today |
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Municipal bond yields attractive |
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Low quality bonds at default risk |
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U.S. Treasury yields appealing versus other countries |
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Worldwide demand strong |
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Disclosure
This information is of a general nature and does not constitute financial advice. It does not take into account your individual financial situation, objectives or needs, and should not be relied upon as a substitute for financial or other professional advice to assess, among other things, whether any such information is appropriate for you and/or applicable to your particular circumstances. In addition, this does not constitute an offer to sell, or the solicitation of an offer to buy, any financial product, service or program. The information contained herein is based on public information we believe to be reliable, but its accuracy is not guaranteed.
Investing involves risks, including loss of principal.
Past performance is no guarantee of future results.
ALPS Distributors, Inc. 1290 Broadway, Ste. 1100, Denver, CO 80203 (Member FINRA). ALPS is not affiliated with James Investment Research, Inc.
*Quantitative Easing is a course of action undertaken by the Federal Reserve to increase the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. **Yield Curve is a line that plots interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. ***Shiller Price/Earnings is a valuation measure applied to the U.S. S&P 500 equity market. *G4 nations comprise of Brazil, Germany, Indian and Japan. ****Quantitative Tightening is a contractionary monetary policy applied by a central bank to decrease amount of liquidity within the economy.
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