It’s no exaggeration to say that uncertainty over the direction of the U.S. market was a critical theme in November. With new leadership set to take charge next year, part of the market’s uncertainty remains fixated on where the Federal Reserve’s rate cuts may fall. Investors largely remain confident that the Federal Reserve will still trim rates, but the frequency and intensity of those cuts have been called into speculation.
News from the Fed hasn’t done much to alleviate these worries, either. Federal Reserve Governor Lisa Cook recently flagged that the scheduling of future cuts would be stringent based on coming data. As such, some question whether the Fed will make a cut in December after all.
New questions about the Fed’s rate-cutting cycle can make it more difficult for investors to manage their bond investments. Luckily, there are good reasons to stay optimistic.
In the November edition of Tactical Take, Jack Janasiewicz, CFA, Portfolio Manager and Lead Portfolio Strategist at Natixis, and Brian Hess, Vice President and Investment Strategist at Natixis, discussed the current outlook for the bond market. During the discussion, Janasiewicz examined how higher real yields bolster nominal solid yields.
“It’s telling us that the bond market is pricing in better growth prospects,” added Janasiewicz. “ We would be a little bit more concerned if the inflation expectations of the equation were what was pushing up nominal yields… but it’s not the bulk of the driver here.”
Investors could remain more confident in their fixed income strategies, with the bond market leaning towards the growth narrative. For those looking to bolster their bond exposure, Natixis offers a variety of mutual funds to cover one’s bases.
A Core Mutual Fund Solution
One such example is the Loomis Sayles Core Plus Bond Fund. NERYX offers a core selection of corporate and U.S. government bonds, focusing on high quality. The fund then looks beyond its benchmark to find unique fixed income assets to bolster yields and long-term returns.
This mutual fund provides an intermediate portfolio duration of roughly 10 years or less. As of November 22nd, 2024, the fund has a 30-day SEC yield of 4.65%.
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