That’s what many on Wall Street have been saying since rate cut expectations began to rise earlier this year. They are now doubling down on their efforts, with the Fed signaling a final rate cut in September. This would make the cash rate less attractive than other components of fixed income. A rate cut usually means bond prices are likely to rise. There is an inverse relationship between output and price. Buying bonds also means locking in long-term interest rates, which can be higher than cash. Since 2022, many investors have flocked to cash, with yields rising sharply as the Federal Reserve began sharply raising interest rates to combat inflation. “Therefore, yesterday’s policy meeting, combined with recent data, strongly suggests that investors should prepare for the Fed to cut interest rates in September and begin to reduce cash allocations and move into the more attractive fixed income area,” Rick said. Reid, chief investment officer of global fixed income, said in a report on Thursday. “More accommodative central bank policies could boost risk markets such as high-yield fixed income and other spread products, including structured products, investment-grade corporates and emerging market debt,” said Robert Morgan, chief investment strategist and head of global bonds at JPMorgan Chase & Co. Tip said. T. Rowe Price capital markets strategist Tim Murray said he prefers high-yield bonds to U.S. Treasuries. For investors looking for ideas, here are the best-performing global fixed income funds covered by Morningstar.
