Robert Tipp
speaker
51 appearances
1 recordings
1 series
first heard Jun 2019
last heard Jun 2019
Robert Tipp’s voice in public audio — every appearance, attributed to the second.
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Appearances
I think there have been a couple areas, profit opportunities in the bond market over the last six months.
The principal one has been simply the play to stay fully invested in the market and, if anything, to have an above-average sensitivity to interest rates or being long duration in order to capitalize on the drop in rates.
The other area, of course, has been to, within the fixed income markets, try to find the areas that offer incremental yield, whether those are in structured product or in corporate bonds, in emerging markets, select emerging markets, and that kind of thing.
Most have had a sluggish quarter.
in the second quarter, but they had strong performance year to date.
And those have offered incremental yield and those spreads have come in offering some capital appreciation as well.
So that's what's been working in the bond market.
And of course, generally, this year, equity markets have risen, although that's slowed down in the second quarter with the trade frictions heating up.
Right now, what's priced in over the balance of the year is
is that they're gonna take the Fed funds rate down into the 160s from right now the 230s.
So you have a few interest rate cuts priced in.
So if your strategy was gonna be to position on the front end of the yield curve for interest rate cuts, if that hurdle is not met and exceeded, you're actually not gonna make any money
being along the front end of the curve, a 10-year treasury at 2%, you can ask yourself the question, where is the Fed funds rate going to be on average, say, over the next 10 years?
And obviously, if you look backwards long enough, you would see that that Fed funds rate averaged significantly more than 2%.
But there are a couple of reasons to believe, I think, that from 240, it's pretty much one way from here.
The rate at which the Fed funds rate is going to fall is in question.
But number one, most major markets in the world, whether they're sluggish economies with a more aged demographic like Japan or
or even a high-growth economy like Australia or New Zealand with a more rapidly growing population, or someplace in between like the Eurozone.
Interest rates are lower than the United States.
Most of the short rates are at a one handle in Australia and New Zealand.
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