US equities (^DJI, ^IXIC, ^GSPC) are rallying in Thursday’s session on the back of positive-looking jobless claims and US retail sales data. Coupled with this week’s inflation prints, what does new data signal for the Federal Reserve’s interest rate policy and the outlook for markets?
Regan Capital CIO Skyler Weinand and Morgan Stanley Investment Management senior fixed income portfolio manager Andrew Szczurowski sit down with the Market Domination team to discuss investing in the bond market (^TYX, ^TNX, ^FVX) as the Fed considers interest rate cuts in late 2024.
"The important thing that we’re seeing is that the general trend in inflation is going the right direction for the Fed. That’s giving investors confidence to go back into the bond market," Szczurowski tells Yahoo Finance. "Bonds act as a great hedge on your equity and risk portfolios. When inflation subsides and that’s why it wasn’t a great hedge in [2022], but you’re seeing it kind of come back into balance in 2024."
Weinand believes "way too many" rate cuts are priced in for the next 12 months: "There’s 8 to 9 cuts already priced in in the fixed income market over the next 12 months, for cuts between now and the end of the year, and another four plus in 2025 through next August… I think you can actually stay on the front end of the curve still, whether it’s in T-bills or floating rate bonds and benefit from that hugely inverted curve."
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