The world may seem like it’s in chaos with war in Iran, volatility at fever pitch and oil prices soaring, but when it comes to the Federal Reserve’s view of its interest rate policy, it appears to be steady as she goes, at least in the near term.
The steady as she goes mindset was the signal Fed Chairman Jerome Powell sent at the central bank’s last meeting in January, even as the Fed stood divided. In prepared remarks, Powell said the committee is “well-positioned” to assess incoming data, noting they need to see more consistent evidence that inflation is moving sustainably toward their 2% goal before committing to further reductions.
Expectations on Wall Street were for the Fed to keep rates steady in the 3.5% to 3.75% range through April, with any cuts coming during the July meeting at the earliest. It could be pushed back to September or even further if inflation keeps rising, the war in Iran continues and disruptions in the Strait of Hormuz don’t end.
On the other hand, while stock market volatility tends to drive many investors to seek out the relative stability of bonds, finding the right investment vehicle in the current interest rate environment can be a challenge – but there are options that may hold advantages.
Actively Managing The Wait With The Infrastructure Capital Bond Income ETF
The Fed’s policy shouldn’t be too much of a shock to the bond market, even though it complicates the path for bond price appreciation; however, for income-seeking investors, there are opportunities to be found through actively managed bond ETFs. That’s because they can continually reinvest the proceeds from maturing bonds with lower interest into securities that pay higher rates. As a result, investors could potentially get higher monthly dividend payments, which is what income-seeking investors are after.
It’s the philosophy behind the Infrastructure Capital Bond Income ETF (NYSE:BNDS), which seeks to maximize current income, with a secondary objective to pursue strategic opportunities for capital appreciation. BNDS …
This post was originally published here
