Volatility will seemingly proceed within the bond market, particularly in terms of Treasury yields, in response to Kevin Flanagan, head of mounted revenue technique at WisdomTree.
Advisors ought to be speaking that to shoppers, he says. In the meantime, for mounted revenue, he suggests contemplating the “barbell” strategy.
The barbell technique requires buyers to purchase short-term and long-term bonds however not intermediate-term bonds, in response to the Company Finance Institute. That distribution, on the 2 excessive ends of the maturity timeline, creates a barbell form, CFI notes, including the technique “gives buyers publicity to excessive yielding bonds with restricted threat.”
By way of electronic mail, we requested Flanagan just a few questions in regards to the state of the present market and the place he thinks it’s headed.
“My solutions are considered by means of the bond market lens,” he instructed ThinkAdvisor.
1. What’s your view on the place volatility is headed in Q3 & This autumn and why?
Kevin Flanagan: We count on to see continued volatility within the bond market, particularly because it pertains to Treasury yields.
With the Fed being “knowledge dependent,” the Treasury market will probably be responding to key financial experiences because it pertains to their outlook on the magnitude of future fee hikes.