Yahoo Finance Are good times over for bond traders?
The guessing game involving rising rates continues on Wall Street, but one fact remains - this is a tricky time to have fixed income in your portfolio. Jack McIntyre is the Portfolio Manager for the Legg Mason Brandywine Global Opportunities Bond Fund (GOBSX). It is a Morningstar rated 5-star fund with approximately $4 billion in assets under management.
Looking at major influences in the bond market, McIntyre says he's still bullish on the U.S. dollar. but said its come too far too quickly and needs to take a breather.
Although pundits anticipate a rate hike as soon as later this year, developments such as weaker than expected economic data may delay the Fed from moving.
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Also McIntyre noted that easy money around the world is moving the US bond market and his portfolio has decreased its position in anticipation of a "counter-trend move in the currency."
Not all bonds are the same and low yielding, according to McIntyre, therefore if you want to hold bonds, you have to have a higher risk tolerance. Also he suggested looking outside the U.S. He says ‘‘there is still a chase for yield or interest in bonds globally and there are still some attractive bond markets, which have too much inflation expectations getting priced into their yields.”
As for when the Federal Reserve will pull the trigger and raise rates, McIntyre isn't expecting a surprise. He applauds the Fed saying “this is the most well communicated tightening cycle that has happened yet .”
The fixed-income portfolio manager believes the Fed learned its lesson after getting burned with the way they announced QE tapering, which resulted in the ‘Taper Tantrum,” Wall Street speak for anticipation of the negative economic ripple from a reduction in QE; something that never happened.
McIntyre says the upcoming economic data will determine when interest rates will rise.
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