Is the Bull Market Over?
With the Fed raising rates by 500 basis points, it’s becoming conventional wisdom that the secular bull market in bonds is over. Even PIMCO’s Bill Gross, also known as “The Bond King,” recently declared, “The secular 30-year bull market in bonds likely ended.”
But to cite Mark Twain, reports of the death of the bond bull market have been “greatly exaggerated.” A lot of investors through the years have declared this bond rally of a lifetime over, and it has repeatedly proven to not be the case.
Treasury yields have risen sharply across the yield curve on fears that inflation will remain higher for longer. As a result, many believe that the Fed will maintain higher rates for longer as well.
While the near-term faces headwinds in stubbornly high inflation, there are reasons to believe the bond bull isn’t dead yet.
- While the economy is hardly rolling over, GDP growth is slowing down and a recession, while delayed, may yet rear its ugly head as higher rates and an inverted yield curve begin to bite this year.
- Employment growth, while stable, is peaking, and many expect the unemployment rate to rise to over 4% over the coming months.
- Assuming this scenario occurs, aggregate demand will be reduced, and lower demand should in turn lead to lower prices.
- The U.S. economy is highly leveraged. The economy will not be able to sustain higher interest rates without having a damaging effect on growth and inflation.
- Inflation has remained stubbornly high but has been primarily impacted by rising shelter costs. As shelter costs peak and adjust, lower headline inflation should follow.
In this session, we will flesh out the bullish case for bonds and compare different scenarios. At the same time, we will identify and discuss possible catalysts that will end the long-standing “love affair” with bonds. We will also explore fixed income strategies that may be effective in either bullish or bearish environments.
Presenter: Tom Slefinger, Senior Vice President, Institutional Fixed Income Sales, Alloya Investment Services
Program Level: Intermediate
CPE Credits: 1.5
Field of Study: Economics
Economic Outlook and Credit Union Forecast
During this presentation, we will discuss how the global economy, the overall financial sector and the labor market will affect the U.S. economy, U.S. interest rates, and ultimately credit union balance sheet and earnings performance. Steven Rick will analyze and establish standards against which your credit union’s own performance can be measured. He will also identify trends of savings and loan activity and weigh the influence of future economic events on growth patterns out into 2025.
Presenter: Steven Rick, Director, Chief Economist, TruStage™
Program Level: Intermediate
CPE Credits: 2.5
Field of Study: Economics
