Bonds Take Center Stage

Friday 05 April 2024

Investment Talks

   

Bonds Take Center Stage

April 2024 | For most of the last year, savers have been earning a reasonable return in cash. But how long can these compelling cash rates last? Historically, the answer has been: not very long. In every rate hike cycle since the 1970s, the US Federal Reserve has “paused at the peak” federal funds rate for a matter of months, not years, and history suggests the rate cuts could begin soon. With history as a guide, we believe investors may benefit from locking in some of today’s historically elevated interest rates by moving out of cash and into short-term bonds.

01 |  Savers have been earning a reasonable return in cash for the better part of the last year. But these compelling cash rates may not last long.

02 | Against the interest rate risk inherent in most fixed income securities, investors should consider the reinvestment risk inherent in cash.

03 | Once the Fed starts cutting its policy rate, cash rates could move hundreds of basis points lower in a very short period of time.

Bonds Take Center Stage

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of January 31 2024 . Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the [author] and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.

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