Bond Fund Entry Points Looking Attractive - Long Term

21 Nis 2023

As interest rates continue to rise, existing bond values have fallen over the last year and a half. It looks as though the Fed will continue to raise rates at a slower (25 bps) pace than last year, which will still create some downward pressure on bond prices. However, as prices are falling and yields are increasing, this makes these entry points extremely attractive for both risk management and tax advantaged yields. Once rates stabilize, bond pricing should as well and set up for a return to the mean. In this case, that would be 200 WMA, currently sitting at $59.22. This would be especially true if there is a scenario in which the Fed begins to lower rates in a couple of years. As mentioned in the title, this Municipal Bond Fund could be a great low risk place to park cash in the event of an economic downturn for long term portfolio stability and/or income generation. Bonds, while inherently boring, tend to out perform the market in poor economic conditions.

This is a long term analysis, and will take time to fully play out (5-10 years). Bonds could be cool again come 2025 and beyond. Happy trading!