Market MakeHer Podcast 36. Refresher: We are Paying Attention to Bonds Again
May 17, 2024
The bond market is back in focus as the Fed navigates a tricky landscape of rate hikes and potential recession. Jess Inskip dives into the mechanics of Treasury securities and how yields fluctuate with supply and demand. An inverted yield curve could signal economic slowdowns, acting like a crystal ball for investors. The podcast also discusses strategies for investing in treasuries, including the benefits of ETFs, and highlights major foreign holders of U.S. debt—revealing insights into the global economy and effective portfolio management.
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Fed vs. Yield Curve Roles
- The Fed mainly affects short-term rates while the yield curve reflects market expectations across maturities.
- Understanding the yield curve is crucial to seeing how Fed actions influence savings, mortgages, and stocks.
Buy Treasuries Through ETFs
- Use ETFs or treasury screeners to access treasuries rather than buying individual bills if you want simplicity.
- Pick the fixed-income category labelled 'treasuries' and let the fund manage rollovers and maturities.
What The Curve Slope Means
- Short-term rates benchmark to the federal funds rate, long-term rates reflect market supply-and-demand and inflation expectations.
- Longer maturities should normally pay more and the curve slope signals growth or slowdown expectations.