MTGP ETF

The Fed might follow its September interest rate cuts with similar moves well into 2025. So some market participants are reassessing opportunities in bonds.

Last week, the Federal Reserve delivered its widely awaited interest rate cut, paring rates by 50 basis points. That potentially signaled the central bank is on track to lower borrowing costs by 150 bps by Q2 2025.

Flush with cash, domestic banks are looking to put some of that capital to work in credit markets. Recent data suggests those institutions are wading back into the collateralized loan obligation (CLO) and mortgage-backed securities (MBS) markets.

When it comes to bonds, advisors and investors are searching for appealing levels of income and reduced Treasury in preparation of the Federal Reserve potentially disappointing regarding multiple rate reductions this year.

Following an avalanche of interest rate hikes by the Federal Reserve spanning 2022 and 2023, an array of high-quality bond classes sport tempting yields. That includes various forms of U.S. government debt.

By Jeremy Schwartz, CFA, Global Chief Investment Officer In 2022, mortgage-backed securities (MBS) posted the worst annual return since the inception of the Bloomberg U.S. Mortgage Backed Securities Index.

By Kevin Flanagan Head of Fixed Income Strategy and Scott Welch, CIMA ® Chief Investment Officer, Model Portfolios This article is relevant to financial professionals who are considering offering model portfolios to their clients. If you are an individual investor interested in WisdomTree ETF Model Portfolios, please inquire with your financial professional.

With 10-year Treasury yields hovering around 4.84%, the flirtation with 5% is ongoing and dangerous, spooking many fixed income investors in the process. However, it pays to remember that performances across the bond market are not linear.