2023-07-30 11:00:00
Investing in debt instruments during this period therefore has the opportunity to generate good returns. It is advisable to diversify into investment grade (IG) global bonds in order to create opportunities for returns and low investment risks from the credit rating of the instrument and from the diversification of the risk to global bonds.
Investing in debt instruments during this period therefore has the opportunity to generate good returns. It is advisable to diversify into investment grade (IG) global bonds in order to create opportunities for returns and low investment risks from the credit rating of the instrument and from the diversification of the risk to global bonds.
Federal Reserve decide to raisepolicy rate at the latest meeting last week. And it may be the last time for raising interest rates to fight inflation that lasted more than a year.Investing in fixed income during this period is attractive. which is not only US bonds But also includes bond investment in other regions that have a downward trend over the next 1 year.
From the Federal Open Market Committee (FOMC) meeting held on July 25-26, the meetingConsensus to raise the US policy rate by another 25 bps to 5.25-5.50% as expected. As a result, the 10-year US government bond yield (Bond Yield) remained stable at about 3.8%, which was the level before the meeting.
In addition, data from the CME FedWatch Tool suggests that the market sees a 78% chance that the Fed will hold interest rates at its next meeting in September, and there is a possibility that it will start cutting rates sometime in the quarter. 1 year 2024
If the Fed decides to keep the policy rate unchanged at the September meeting This means that US policy interest rates have passed their peak and are waiting for the day to reverse. And even during this time, inflation and other economic numbers The release may change the market’s outlook on the Fed’s decision at the September meeting.
But if you look at next year’s picture, you will find that the picture of interest rates is still clear. That’s why we see this moment as a turning point. And it’s a good time to invest in debt securities. which is not only US bonds but also bonds in other regions where the policy interest rate is likely to turn downward over the next year. For example, the European side
The decision of the European Central Bank (ECB) has received no less attention and impact on the overall investment landscape than the decision of the Fed, as European inflation has also started to slow in recent times. European inflation in June stood at 5.5%, decelerating from 6.1% in the previous month. This is even higher than US inflation at 3%.
But if looking ahead over the next year, inflation in Europe is likely to slow down as well, with the ECB expecting European inflation in 2024 to be at 3%, down from 5.4% in 2024. This reflects the tendency of European policy interest rates to be in a downward direction, similar to that of the US.
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A downward interest rate reversal over the next 1 year will cause bond yields to decline as well. In which the yield and the price of bonds will move in opposite directions in the secondary market, investing in Bonds during this time is like a lock in the returns of Bonds and also has the opportunity to return from the price of the Bonds that will rise as well.
Therefore, investing in debt instruments during this period has a good chance of generating good returns. It is recommended to diversify investments to investment grade (IG) global bonds in order to create opportunities for returns while investment risks are low from the credit rating of the instruments and from diversification. Still Global Bond
If you have any concerns about your own financial planning You can send your questions to [email protected] I Article by Nattaporn Thorawongthawat AFPTTM Wealth Manager TISCO Bank
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