Bond yields are rising again, signaling that inflation isn't going away anytime soon. Investors are worried that the Federal Reserve's target of 2% inflation is unrealistic, leading to falling bond values.
Experts advise caution in the bond market, especially with long-term and risky investments. The front part of the curve, like 2-year Treasuries, is considered safer.
Geopolitical tensions are also playing a role, as rising commodity prices add to inflation concerns.
Investors are adjusting their expectations for future interest rate movements due to recent economic data and the Federal Reserve's policy decisions. The market previously anticipated six rate cuts, but now only three are expected. Inflation remains high, leaving investors uncertain about the timing and extent of rate cuts. A cautious approach is advised, with gradual adjustments to bond portfolios recommended. Domestic U.S. fixed income investments are seen as relatively stable, while international investments may provide opportunities but require careful consideration.
