The bond market may do something unusual for this time of year
Year-end bond market volume is dropping off earlier than usual and is expected to fall around Thanksgiving instead of mid-December. Well's Fargo Securities' Michael Schumacher says that because of the geopolitical tensions that have been occurring recently it's putting bond investors on edge. "This week it's Brexit. Probably Brexit again next week. Trade after that. Hong Kong. Iran. You could go on and on and on." The angst from this "atypical" backdrop has Schumacher recommending high-yield investments and to also avoid long-duration bonds, such as the 10-year Treasury due to the possible negative outcome of Brexit. Therefore, he says that short duration bonds could have decent yield and not a ton of downside. What do you think of Schumacher's recommendations?
I agree with some of Schumacher's recommendations. It's a good idea to not completely avoid the risk but rather just dial it back a little bit. I also agree that the best place to go with fairly short duration bonds that have a decent yield with little downside.
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