iShares iBoxx $ Investment Grade Corporate Bond ETF (ARCA: LQD)

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iShares iBoxx $ Investment Grade Corporate Bond ETF

The fund generally invests at least 90% of its assets in component securities of the underlying index and at least 95% of its assets in investment-grade corporate bonds. The underlying index is designed to provide a broad representation of the U.S. dollar-denominated liquid investment-grade corporate bond market.

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Goldman Sachs identifica 20 ETF con movimientos destacados en días de la Reunión de la Fed

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iShares Trust iShares Investment Grade Corporate Bond BuyWrite Strategy ETF

As investors process shifting trade policies, inflation and geopolitical tensions, First Trust Advisors launches three new Target Income <a href="https://www.benzinga.com/etfs">ETFs aimed at boosting income</a> potential while maintaining fixed-income exposure. These actively managed funds each carry a net expense ratio of 0.65% and utilize option strategies to strengthen returns.
Also See: <a href="https://www.benzinga.com/content/43692114/3-dividend-etfs-to-maximize-passive-income">3 Dividend ETFs to Maximize Passive Income</a>
The three newly launched funds, FT Vest Investment Grade &amp; Target Income ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQTI#NYSE">LQTI</a>), FT Vest High Yield &amp; Target Income ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYTI#NYSE">HYTI</a>), and FT Vest 20+ Year Treasury &amp; Target Income ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LTTI#NYSE">LTTI</a>), offer a combination of U.S. Treasury securities with options-driven exposure to specific fixed-income sectors.
LQTI provides investment-grade corporate bond exposure through its underlying ETF, the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>). HYTI targets high-yield corporate bonds via the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>). LTTI focuses on long-term U.S. Treasury exposure, tied to the iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>).
Each fund utilizes FLEX options, which are customizable exchange-traded options designed to optimize risk and return. This is in effort to distribute income at an annual rate 5% higher than their underlying ETFs.
With over 160 ETFs listed in the U.S., First Trust continues to expand its roots in the income-focused investing space. One of its flagship funds, the First Trust Preferred Securities &amp; Income ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FPE#NYSE">FPE</a>), has more than $5 billion in assets under management.
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iShares Trust Barclays 20+ Year Treasury Bond Fund

3 New Fixed-Income ETFs Use Options To Target Higher Income

Fixed income investors are finally seeing some relief after enduring the longest <a href="https://www.benzinga.com/topic/yield-curve">yield curve inversion</a> in modern history. 
<h2 class="wp-block-heading">Yield Curve Steepening: A Shift After Years Of Inversion</h2>
Since July 2022, short-term yields sat stubbornly above long-term yields, creating a highly unusual environment. But as of December 2024, the yield curve has returned to positive territory, though it remains far from its historical norm. 
The 2-year/10-year spread now sits at just +0.33%, well below the 1% average.
Read Also: <a href="https://www.benzinga.com/government/regulations/25/01/43059174/buy-long-duration-bonds-says-bank-of-america-strategist">&#8216;Buy Long Duration Bonds,&#8217; Says Bank Of America Strategist: 4 ETFs To Watch As Trump&#8217;s Deficit Fight Unfolds</a>
<h2 class="wp-block-heading">Where The Best Value Lies In Corporate Bonds</h2>
According to Lawrence Gillum, Chief Fixed Income Strategist at LPL Financial, the Treasury curve may continue to steepen as:
<ul>
<li>economic data beats expectations, </li>
<li>inflation remains sticky</li>
<li>Treasury issuance ramps up to cover widening budget deficits. </li>
</ul>
However, despite this shift, Gillum believes the best &#8220;bang for your buck&#8221; still lies in the 1–5-year segment of the corporate credit curve, with the 5–7-year range also offering incremental value.
<h2 class="wp-block-heading">ETFs To Capitalize On The Opportunity</h2>
For investors looking to position themselves accordingly, ETFs like the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>) and the SPDR Portfolio Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPBO#NYSE">SPBO</a>) provide broad exposure to investment-grade corporate credit. Meanwhile, those wanting to stay on the shorter end can consider the Vanguard Short-Term Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VCSH#NASDAQ">VCSH</a>) or the iShares 1-5 Year Investment Grade Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/IGSB#NASDAQ">IGSB</a>), both of which align with Gillum's recommended maturity range.
The takeaway? While longer-term yields are climbing, short- to intermediate-term corporate bonds currently present a compelling risk-reward tradeoff. Some investors are looking to lock in yields while the opportunity remains.
Read Next: 
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<li><a href="https://www.benzinga.com/economics/macro-economic-events/25/01/43101541/exclusive-powell-co-will-wait-wisdomtree-expert-says-on-why-investors-need-smarter-bond-strategy" target="_blank" rel="noreferrer noopener">EXCLUSIVE: &#8216;Powell &amp; Co. Will Wait&#8217; — WisdomTree Expert On Why Investors Need Smarter Bond Strategy</a></li>
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'Best Bang For Your Buck': Expert Sees Strongest Value In 1–5 Year Credit Curve

The Federal Reserve indicated a more tempered approach to <a href="https://www.benzinga.com/25/01/42886101/investors-should-expect-no-rate-cuts-in-q1-2025-after-federal-reserves-december-minutes-release-strategist-says">interest rate cuts in 2025</a>.
That&#8217;s according to minutes from the Fed&#8217;s December meeting, which were released on Wednesday, Jan. 8. 
Investor interest shifted toward treasury bonds, as the 10-year yield briefly touched 4.73% on Wednesday, amid resurfacing inflation fears and anticipation around potential tariffs and tax policies. 
Fixed-income exchange-traded funds (ETFs) can help investors get exposure to bonds. This is thanks to the stability and predictable income opportunity amid equity market volatility that they hold.
Here are three standout ETFs poised to benefit:
<ul>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>) offers diversified exposure to investment-grade corporate bonds, which are less likely to default during economic uncertainty. The ETF boasts a weighted average maturity of 12.94 years but includes bonds with varying maturities to balance risk. Its 30-day SEC yield is 5.4%, and its expense ratio is 0.14%, making it a cost-effective option.</li>
</ul>
<ul>
<li>Vanguard Short-Term Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BSV#NYSE">BSV</a>) is designed for stability and focuses on short-duration U.S. Treasury and investment-grade corporate bonds, with an average maturity of just 2.8 years. Music to the ears for risk-averse investors looking to shield themselves from rate volatility. The fund&#8217;s 30-day SEC yield is approximately 4.4%, with minimal sensitivity to interest rate changes. A low expense ratio of 0.04% makes it even more attractive.</li>
</ul>
<ul>
<li>Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) offers comprehensive exposure to the entire U.S. bond market, including Treasuries, mortgage-backed securities, and investment-grade corporate bonds. The ETF's 30-day SEC yield stands at 4.55%, providing a steady income stream. An expense ratio of 0.03% is another point to note. Additionally, the ETF's liquidity and resilience during past crises, such as the 2020 pandemic sell-off, makes it a reliable long-term investment choice.</li>
</ul>
<h3 class="wp-block-heading">Why Bond Funds?</h3>
The Fed's cautious message supports a longer-term case for bond ETFs. 
Short-duration bond ETFs are less sensitive to rate fluctuations and can offer better returns than cash or savings accounts while limiting interest rate risk.
Similarly, investment-grade corporate bond ETFs are a sweet spot for yield-seeking investors. These ETFs balance risk and reward by offering exposure to highly rated corporate debt that typically performs well in uncertain economic conditions.
These apart, ultra-short bond ETFs like the iShares 0-3 Month Treasury Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SGOV#NYSE">SGOV</a>) could also gain traction as cash alternatives.
See Next:
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SGOV

Fed's Cautious Rate Cut Approach Boosts Appeal Of These 3 ETFs

As markets brace for the Federal Reserve's final policy meeting of the year, scheduled at 2:00 p.m. Wednesday, Goldman Sachs highlighted 20 exchange-traded funds (ETFs) that have historically shown outsized <a href="https://www.benzinga.com/topic/federal-reserve">moves around Fed decision days</a>.
While a 25-basis-point rate cut to a target range of 4.25%-4.50% is widely anticipated, the market's focus is on the Fed's forward guidance, particularly the Summary of Economic Projections (SEP) and the updated &#8220;dot plot.&#8221;
Following December's expected cut, Goldman Sachs projects a more measured pace of easing next year, forecasting rate cuts in March, June, and September, with the terminal rate seen at 3.50%-3.75%.
Read Also: <a href="https://www.benzinga.com/economics/macro-economic-events/24/12/42554114/all-eyes-on-december-fed-meeting-as-traders-await-interest-rate-projections">All Eyes On December Fed Meeting As Traders Await Interest Rate Projections</a>
<h3 class="wp-block-heading">Market Dynamics Around Fed Days</h3>
U.S. equity markets have displayed strong short-term gains during Fed meeting weeks in 2024. 
Investors employing a simple strategy of buying the S&amp;P 500 index at market close before a Federal Open Market Committee (FOMC) announcement and selling at close the following day have captured median returns of 1.1% across the past seven meetings.
Yet those extending the trade horizon to 15 sessions post-Fed meeting have enjoyed significantly larger average gains of 3.29%, more than double the short-term returns. Notably, every Fed meeting this year has resulted in positive 15-day returns.
"We observe that U.S. banking ETFs, such as SPDR S&amp;P Bank ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KBE#NYSE">KBE</a>) and SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>), have seen unusually large moves on FOMC days since 2022" Goldman analysts wrote in a recent note.
For bond-focused investors, the report highlights consistent post-meeting gains in high-yield and investment-grade ETFs like iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>) and iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>).
Meanwhile, energy-focused ETFs, such as the United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), have seen negative reactions. 
<h3 class="wp-block-heading">ETFs Showing Heightened Fed-Day Moves</h3>
Here's Goldman Sachs' list of 20 ETFs with the largest absolute moves – which include both positive and negative swing – on FOMC days:
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>ETF Name</th>
<th>Focus</th>
<th>Average Absolute Move on FOMC since 2022</th>
<th>Average Absolute Move (Last 3 FOMC events)</th>
</tr>
</thead>
<tbody>
<tr>
<td>SPDR S&amp;P Regional Banking ETF </td>
<td>Regional Banking</td>
<td>2.5%</td>
<td>1.5%</td>
</tr>
<tr>
<td>VanEck Semiconductor ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SMH#NASDAQ">SMH</a>)</td>
<td>Semiconductor</td>
<td>2.4%</td>
<td>3.7%</td>
</tr>
<tr>
<td>iShares Semiconductor ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SOXX#NASDAQ">SOXX</a>)</td>
<td>Semiconductor</td>
<td>2.4%</td>
<td>3.3%</td>
</tr>
<tr>
<td>SPDR S&amp;P Bank ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KBE#NYSE">KBE</a>)</td>
<td>US Large Banks</td>
<td>2.2%</td>
<td>1.3%</td>
</tr>
<tr>
<td>SPDR S&amp;P Biotech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XBI#NYSE">XBI</a>)</td>
<td>Biotech</td>
<td>2.0%</td>
<td>0.3%</td>
</tr>
<tr>
<td>United States Oil Fund </td>
<td>Oil</td>
<td>1.9%</td>
<td>2.0%</td>
</tr>
<tr>
<td>Technology Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>)</td>
<td>Technology</td>
<td>1.9%</td>
<td>2.3%</td>
</tr>
<tr>
<td>iShares Silver Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SLV#NYSE">SLV</a>)</td>
<td>Silver</td>
<td>1.7%</td>
<td>2.4%</td>
</tr>
<tr>
<td>Invesco QQQ Trust (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>)</td>
<td>Nasdaq 100</td>
<td>1.7%</td>
<td>1.7%</td>
</tr>
<tr>
<td>Consumer Discretionary Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>)</td>
<td>Discretionary</td>
<td>1.6%</td>
<td>1.0%</td>
</tr>
<tr>
<td>iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>)</td>
<td>Russell 2000</td>
<td>1.5%</td>
<td>0.3%</td>
</tr>
<tr>
<td>SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>)</td>
<td>S&amp;P 500</td>
<td>1.2%</td>
<td>0.9%</td>
</tr>
<tr>
<td>Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>)</td>
<td>S&amp;P 500</td>
<td>1.2%</td>
<td>0.9%</td>
</tr>
<tr>
<td>Financial Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLF#NYSE">XLF</a>)</td>
<td>Financial</td>
<td>1.1%</td>
<td>0.7%</td>
</tr>
<tr>
<td>SPDR Gold Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>)</td>
<td>Gold</td>
<td>0.9%</td>
<td>1.4%</td>
</tr>
<tr>
<td>iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>)</td>
<td>EM Bond</td>
<td>0.8%</td>
<td>0.6%</td>
</tr>
<tr>
<td>iShares iBoxx $ High Yield Corporate Bond ETF </td>
<td>HY Corp Bond</td>
<td>0.6%</td>
<td>0.3%</td>
</tr>
<tr>
<td>iShares iBoxx $ Investment Grade Corporate Bond ETF </td>
<td>IG Corp Bond</td>
<td>0.6%</td>
<td>0.7%</td>
</tr>
<tr>
<td>iShares 7-10 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/IEF#NASDAQ">IEF</a>)</td>
<td>7-10 Year Treasury</td>
<td>0.6%</td>
<td>0.7%</td>
</tr>
<tr>
<td>iShares TIPS Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TIP#NYSE">TIP</a>)</td>
<td>TIPS Bond</td>
<td>0.5%</td>
<td>0.4%</td>
</tr>
<tr>
<td>Average</td>
<td></td>
<td>1.5%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>
</figure>
Check Out: 
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</ul>
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20 ETFs Primed For Unusually Big Swings On Fed Meeting Days

Legendary investor Ken Fisher's hedge fund, Fisher Asset Management, grew the value of its portfolio by more than $14 billion dollars <a href="https://www.benzinga.com/personal-finance/24/09/41030896/why-ken-fisher-says-capital-preservation-could-cost-you-big-in-retirement">in the last quarter</a>.
Here's a look at the fund's most significant trades.  
Top Holdings: Fisher Asset Management reported approximately $244 billion in assets under management (AUM), according to an SEC<a href="https://www.sec.gov/Archives/edgar/data/850529/000085052924000012/xslForm13F_X02/primary_doc.xml"> filing</a>. 
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The firm also added small amounts to each of its top five positions: 
<ul>
<li>Apple, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>)</li>
<li>Microsoft Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>)</li>
<li>NVIDIA Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>)</li>
<li>Amazon.com, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) and </li>
<li>Alphabet, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>). </li>
</ul>
Top Buys: Fisher Asset Management's top buy in terms of value was $2.09 billion in shares of the iShares 7-10 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/IEF#NASDAQ">IEF</a>) which provides targeted exposure to U.S. Treasury bonds with remaining maturities between seven and ten years. Treasury bonds are generally considered low-risk investments, which can help balance riskier assets in a diversified portfolio. 
The fund's second and third-largest buys were $850 million in shares of JPMorgan Chase &amp; Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>) and $490 million worth of shares of oil and natural gas producer ConocoPhillips (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/COP#NYSE">COP</a>). 
Top Sells: The hedge fund's top sells by value were $1.35 billion in shares of the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>), $750 million worth of Walt Disney Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIS#NYSE">DIS</a>) shares and $710 million in shares of Ford Motor Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/F#NYSE">F</a>). 
New Holdings: One of the fund's most notable new holdings is Nu Holdings Ltd. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NU#NYSE">NU</a>), a digital banking services provider also backed by Warren Buffett. Fisher Asset management opened a position in Nu Holdings with approximately 7.23 million shares valued at more than $98.7 million.&nbsp;
The hedge fund also took a $28.3 million new position in wealth manager UBS Group AG (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UBS#NYSE">UBS</a>) and opened a $17.2 million position in the iShares MSCI China A ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/CNYA#BATS">CNYA</a>), which tracks an index composed of Chinese equities available to international investors.
Why It Matters: Hedge funds often use sophisticated investment strategies and have access to extensive research which can provide insights into emerging market trends. Individual investors can track hedge funds for investment ideas, successful strategies or compare their own performance against professional investors.&nbsp;
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Here's How Billionaire Ken Fisher's Hedge Fund Made $14 Billion Last Quarter

Investors looking to bonds and bond ETFs for stability may face heightened volatility due to President-elect Donald Trump's approach to tariffs could put <a href="https://www.benzinga.com/topic/treasury-yields">upward pressure on yields</a>.
What Happened: Bond yields continue to climb after the Fed's 25-basis-point rate cut on Thursday. With the 10-year Treasury yield reached 4.34% in response to market speculation around Trump's fiscal agenda.
This shift complicates the Federal Reserve's efforts to ease borrowing costs, a concern for individual bondholders and bond ETFs investors. The backdrop of tax cuts and anticipated tariffs could limit the Fed's <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/11/41814589/why-trumps-boost-to-treasury-yields-inflation-expectations-may-weaken-feds-efforts-">ability to cut rates deeply</a>.
Also Read: <a href="https://www.benzinga.com/24/11/41886697/two-ideas-famed-stock-market-forecasters-agree-on-for-2025">Why Trump&#8217;s Win Has 2 Market Experts Betting On Small Caps, Financials</a>
Since mid-September, Treasury yields have surged by over 70 basis points, putting additional pressure on bond prices and impacting major bond ETFs. BofA Global Research has adjusted its outlook, with Treasury yields now projected in the 4.25%-4.75% range, Reuters reports. This rising yield environment creates challenges for bonds, as higher yields correspond to declining bond prices, which could erode returns for investors in bond ETFs.
Why It Matters: According to Reuters, the Committee for a Responsible Federal Budget estimates that Trump's proposed fiscal policies will add approximately $7.75 trillion to the national debt in a decade. Economists, banks and analysts have all warned that the <a href="https://www.benzinga.com/personal-finance/24/09/40961812/economists-warn-trumps-plans-for-tax-cuts-tariffs-and-deportation-could-trigger-skyrocketing-inf">plans will worsen inflation</a> and make debt unsustainable.
Bond ETFs, which offer exposure across various segments of the bond market, are likely to feel the impact of these fiscal pressures as bond yields trend higher.
Increased yields may lead to more appealing income for bond ETF investors but could also heighten risks related to price declines as yields continue to rise.
On Monday, 10 prominent bond ETFs were mainly trading lower:
<ul>
<li>Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>): $72.93, down 0.22%.</li>
<li>iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>): $98.26, 0.25% lower.</li>
<li>SPDR Portfolio Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPAB#NYSE">SPAB</a>): $25.34, down 0.3%.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): $109.60, 0.23% lower.</li>
<li>Vanguard Short-Term Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VCSH#NASDAQ">VCSH</a>): $78.30, down 0.09%.</li>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): $91.93, down 0.6%.</li>
<li>Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VCIT#NASDAQ">VCIT</a>): $81.47, 0.22% lower.</li>
<li>iShares U.S. Treasury Bond ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/GOVT#BATS">GOVT</a>): $22.72, down 0.24%.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): $97.02, down 0.05%.</li>
<li>Vanguard Total International Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>): $49.94, up 0.09%</li>
</ul>
With rising bond yields and fiscal expansion under Trump, bond ETFs could continue to see volatility. 
Bond investors may need to weigh the attraction of higher yields against potential declines in bond prices, particularly in high-yield and long-term Treasury segments, where market shifts are expected to be most pronounced.
Read Next:
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Bond ETFs Slide As Fed Cuts Clash With Trump's Fiscal Agenda

A major trend shift is unfolding in the bond market, as key Treasury yields are currently testing the support of the crucial 200-day moving average, following the release of benign economic data that has cemented investor bets on <a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">Federal Reserve rate cuts.</a>
Last month, the inflation rate calculated using the consumer price index (CPI) came in at 3.4% compared to the same month last year, down from 3.5% in March, and in line with the forecasted 3.4% increase. The &#8220;core&#8221; inflation rate, which excludes volatile energy and food prices, also matched estimates, falling from 3.8% to 3.6%.
April's inflation reading has raised hopes that the disinflation trend may restart after three consecutive higher-than-predicted CPI readings in the first quarter. 
In his recent comments, Federal Reserve Chair Jerome Powell downplayed concerns about a possible hike in interest rates, signaling that the next adjustment would likely be a reduction. However, he emphasized this cut might come later than the markets initially anticipated.
Money markets are currently factoring in a 50 basis point reduction in interest rates by the end of the year, with a 70% chance for the Federal Reserve to begin its loosening cycle in September.
<h1 class="wp-block-heading">Treasury Yields Eye 200-Day Moving Average Support</h1>
The yield on the benchmark 10-year Treasury note traded at around 3.36% on Thursday, hitting an intraday low of 3.31%, temporarily sliding below the 200-day average positioned at 3.33%. 
Similarly, yields on both 2-year and 30-year Treasury notes are currently testing the support of the 200-day average.
The 200-day moving average is a widely watched technical indicator that helps investors gauge the long-term trend of a security or index. 
When Treasury yields fall below this level, it often signals a bearish or downward trend, suggesting that investors are seeking safer assets amid expectations of a slowing economy or lower interest rates. This shift can create a more favorable environment for bond prices, which move inversely to yields.
Here&#8217;s a snapshot of the current yield levels compared to their 200-day moving averages, as well as their 2024 high-to-low range. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Maturity</th>
<th>Current Yield</th>
<th>200-day Moving Average</th>
<th>2024 Peak</th>
<th>2024 Low</th>
</tr>
</thead>
<tbody>
<tr>
<td>2 year</td>
<td>4.78%</td>
<td>4.75%</td>
<td>5.05%</td>
<td>4.12%</td>
</tr>
<tr>
<td>5 year</td>
<td>4.39%</td>
<td>4.35%</td>
<td>4.75%</td>
<td>3.75%</td>
</tr>
<tr>
<td>10 year</td>
<td>4.36%</td>
<td>4.33%</td>
<td>4.74%</td>
<td>3.82%</td>
</tr>
<tr>
<td>30 year</td>
<td>4.50%</td>
<td>4.48%</td>
<td>4.85%</td>
<td>4.07%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated as of May 16, 2024 (11:45 a.m. EDT) </figcaption></figure>
<h1 class="wp-block-heading">Chart: Inflation Data Casts Doubt On 10-Year Treasury Yield&#8217;s 2024 Rising Trend</h1>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png" alt="" class="wp-image-341796" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read Also: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38873168/us-inflation-data-prematurely-released-by-accident-yet-traders-missed-golden-oppo">US Inflation Data Prematurely Released By Accident, Yet Traders Missed Golden Opportunity</a>
<h1 class="wp-block-heading">Bond ETFs Set To Rally</h1>
The shift in Treasury yields has set the stage for a rally in bond ETFs, especially those focused on long-duration bonds. 
Here are five bond ETFs poised to benefit from rising expectations of Fed rate cuts:
<ol>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): This ETF tracks long-term U.S. Treasury bonds and is particularly sensitive to changes in interest rates. With long-dated yields falling, TLT could see sharp gains as it moves inversely to yields. In reaction to April&#8217;s inflation data, it rose 1.4% on the day.</li>
<li>Vanguard Total Bond Market Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>): A broader option, BND includes a mix of short-, medium-, and long-term bonds. Its diversified approach makes it a stable choice as market sentiments shift. Following the latest inflation statistics, BND inched 0.6% higher.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): As rate cut expectations strengthen, investment-grade corporate bonds could see price increases. LQD offers exposure to this segment.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): Higher risk and higher reward, JNK covers the high-yield, or &#8220;junk,&#8221; bond market. Rate cuts often boost these bonds as investors hunt for yield.</li>
<li>iShares J.P. Morgan USD Emerging Market Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>): As Treasury yields retreat and the Fed hints at a slower pace for rate hikes, emerging markets bonds could benefit from increased investor appetite for higher-yielding assets. Notably, EMB rose 1.1% on Wednesday, positively reacting to inflation data. </li>
</ol>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38850154/economists-react-to-inflation-retail-sales-the-soft-landing-narrative-is-still-a-po">Economists React To Inflation, Retail Sales: &#8216;The Soft Landing Narrative Is Still A Possibility But Not A Guarantee&#8217;</a>
Photo: Shutterstock

Macro Notification

Treasuries

Disinflation Hopes Reshape Treasury Yields' Major Trend: 5 Bond ETFs Poised To Rally On Fed Rate Cuts

The performance of the U.S. corporate bond market in the first quarter of the year was generally flat, though there were notable distinctions between the high-grade <a href="https://www.benzinga.com/money/high-yield-bonds">and high-yield sectors. </a>
Bonds issued by companies with higher credit ratings (BBB and above) experienced a slight downward trajectory, as showed by the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>). Conversely, lower-rated companies boasting higher yields showed modestly positive performance, as indicated by the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>).
Also Read: <a href="https://www.benzinga.com/news/large-cap/24/04/38098774/top-10-us-high-yield-corporate-bonds-with-returns-over-20-in-april-2024">Top 10 US High-Yield Corporate Bonds With Returns Over 20% In April 2024</a>
Below is a list of U.S. corporate bonds that have exhibited the strongest performance in the last three months.
<h3 class="wp-block-heading">10) Macy&#8217;s Retail Holdings LLC 4.3% 12/43</h3>
<ul>
<li>Issuer: Macy&#8217;s Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/M#NYSE">M</a>)</li>
<li>ISIN: US55616XAJ63</li>
<li>Last price: $82.08</li>
<li>Yield to maturity (%): 5.9712</li>
<li>Maturity: 15/02/2043</li>
<li>Minimum investment amount: $2,000</li>
<li>3-month performance: 15.83%</li>
</ul>
<h3 class="wp-block-heading">9) Ally Financial Inc. 4.7%</h3>
<ul>
<li>Issuer: Ally Financial Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ALLY#NYSE">ALLY</a>)</li>
<li>ISIN: US02005NBN93</li>
<li>Last price: $78.174</li>
<li>Type: subordinated</li>
<li>Minimum investment amount: $1,000</li>
<li>3-month performance: 16.91%</li>
</ul>
<h3 class="wp-block-heading">8) Lincoln National Corp. 7.938% 06/66</h3>
<ul>
<li>Issuer: Lincoln National Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LNC#NYSE">LNC</a>)</li>
<li>ISIN: US534187AS84</li>
<li>Last price: $74.73</li>
<li>Maturity: 17/05/2066</li>
<li>Minimum investment amount: $2,000</li>
<li>3-month performance: 17.87%</li>
</ul>
<h3 class="wp-block-heading">7) Carvana Co. 5.875% 20/28</h3>
<ul>
<li>Issuer: Carvana Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVNA#NYSE">CVNA</a>)</li>
<li>ISIN: USU1468GAD61</li>
<li>Last price: $65.00</li>
<li>Yield to maturity (%): 18.1963</li>
<li>Maturity: 01/10/2028</li>
<li>Minimum investment amount: $2,000</li>
<li>3-month performance: 20.37%</li>
</ul>
<h3 class="wp-block-heading">6) Braskem America Finance Co. 7.125% 11/41</h3>
<ul>
<li>Issuer: Braskem S.A. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BAK#NYSE">BAK</a>)</li>
<li>ISIN: USU1065PAA94</li>
<li>Last price: $90.85</li>
<li>Yield to maturity (%): 8.2834</li>
<li>Maturity: 15/02/2043</li>
<li>Minimum investment amount: $200,000</li>
<li>3-month performance: 20.5%</li>
</ul>
<h3 class="wp-block-heading">5) M.D.C. Holdings Inc. 3.966% 21/61</h3>
<ul>
<li>Issuer: M.D.C. Holdings Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MDC#NYSE">MDC</a>)</li>
<li>ISIN: US55616XAJ63</li>
<li>Last price: $82.08</li>
<li>Yield to maturity (%): 5.9712</li>
<li>Maturity: 15/02/2043</li>
<li>Minimum investment amount: $2,000</li>
<li>3-month performance: 23.53%</li>
</ul>
<h3 class="wp-block-heading">4) QVC Inc. 5.95% 13/43</h3>
<ul>
<li>Issuer: QVC Inc.</li>
<li>ISIN: US747262AM52</li>
<li>Last price: $64.53</li>
<li>Yield to maturity (%): 10.4849</li>
<li>Maturity: 15/03/2043</li>
<li>Minimum investment amount: $1,000</li>
<li>3-month performance: 23.76%</li>
</ul>
<h3 class="wp-block-heading">3) At Home Group Inc. 4.875% 21/28</h3>
<ul>
<li>Issuer: At Home Group Inc.</li>
<li>ISIN: USU04798AA90</li>
<li>Last price: $47.61</li>
<li>Yield to maturity (%): 27.4573</li>
<li>Maturity: 15/07/2028</li>
<li>Minimum investment amount: $2,000</li>
<li>3-month performance: 26.38%</li>
</ul>
<h3 class="wp-block-heading">2) Lumen Technologies Inc. 4.5% 20/29</h3>
<ul>
<li>Issuer: Lumen Technologies Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LUMN#NYSE">LUMN</a>)</li>
<li>ISIN: USU1566PAD79</li>
<li>Last price: $36.32</li>
<li>Yield to maturity (%): 33.1453</li>
<li>Maturity: 15/01/2029</li>
<li>Minimum investment amount: $2,000</li>
<li>3-month performance: 27.01%</li>
</ul>
<h2 class="wp-block-heading">Chart: Lumen Technologies Bond Outperforms Lumen Shares In 2024</h2>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113118/image-8-1024x495.png" alt="" class="wp-image-277973" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113118/image-8-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113118/image-8-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113118/image-8-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113118/image-8-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113118/image-8.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">1) Beyond Meat Inc. 0.000% 21/27</h3>
<ul>
<li>Issuer: Beyond Meat Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BYND#NASDAQ">BYND</a>)</li>
<li>ISIN: US08862EAB56</li>
<li>Last price: $23.87</li>
<li>Maturity: 15/03/2027</li>
<li>Minimum investment amount: $1,000</li>
<li>3-month performance: 28.08%</li>
</ul>
<h2 class="wp-block-heading">Chart: Beyond Meat Bonds Outperform Shares In 2024</h2>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113716/image-9-1024x495.png" alt="" class="wp-image-277986" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113716/image-9-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113716/image-9-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113716/image-9-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113716/image-9-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/04/04113716/image-9.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h2 class="wp-block-heading">Why Have Beyond Meat Bonds Outperformed Shares?</h2>
Beyond Meat reported higher than expected revenue in the fourth quarter of 2023, yet suffered larger losses than anticipated. Following the earnings announcement, the company committed to significantly cutting costs and enhancing manufacturing efficiency. 
These efforts improved the outlook on the company&#8217;s ability to fulfill its debt obligations, boosting investor confidence in Beyond Meat&#8217;s survival prospects, rather than reflecting a true turnaround in its long-term profitability.
Following its earnings report, Beyond Meat saw an initial market enthusiasm with rises in both bonds and shares. However, while bond values maintained their upward trajectory, the stock&#8217;s gains quickly dissipated, reversing the post-earnings uplift. 
Since the beginning of the year, Beyond Meat&#8217;s zero-coupon bond, due to mature in March 2027, has seen a notable increase of 28%, contrasting with a roughly 6% drop in the company&#8217;s share price.
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Top 10 US Corporate Bonds By Market Performance In 2024: April Update

Economist Jared Bernstein has recently discussed the state of consumer debt in the U.S., shedding light on its gradual return to <a href="https://www.benzinga.com/topic/economics">pre-pandemic levels</a>.
What Happened: In an <a href="https://www.bloomberg.com/news/articles/2023-12-31/us-consumer-debt-just-returning-to-normal-levels-jared-bernstein-says?srnd=markets-vp&amp;sref=TBDibEcD">interview</a> with Bloomberg, Bernstein said this development signifies a positive step forward in the ongoing conversations about the nation&#39;s economic recovery and financial stability.
Bernstein elaborated on the surge in consumer debt that occurred during the COVID-19 pandemic.
He attributed this spike to the exceptional circumstances created by the health crisis, including widespread job losses and economic uncertainties.
Many Americans were compelled to rely on credit cards and loans to cover essential expenses, leading to historically high levels of consumer debt.
The situation is gradually improving, Bernstein said. As the economy rebounds and job opportunities expand, individuals are better equipped to manage their debts, he said.&nbsp;
This positive trend is anticipated to bolster economic recovery, as consumers with more manageable debt levels are likely to increase their spending, contributing to overall economic growth.
Additionally, Bernstein emphasized the importance of ongoing government support, such as stimulus checks and enhanced unemployment benefits, in assisting Americans in coping with the financial challenges brought on by the pandemic.
These measures have played a crucial role in providing relief to many households and preventing more severe economic hardships.
While acknowledging the presence of inflation in the economic landscape, Bernstein said it has not significantly impacted consumer debt repayment.
Also Read:&nbsp;<a href="https://www.benzinga.com/news/23/11/35740812/finance-experts-are-strongly-encouraging-consumers-to-save-as-much-as-they-can-this-holiday-season-h">Finance Experts Are Strongly Encouraging Consumers To Save As Much As They Can This Holiday Season &mdash; Here&#39;s Why</a>
He argued that addressing inflation concerns should not overshadow the progress made in stabilizing consumer debt levels, which is essential for the nation&#39;s broader economic health.
According to the report, credit card companies, including Visa Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/v#NYSE">V</a>), Mastercard Incorporated (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ma#NYSE">MA</a>), American Express Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/axp#NYSE">AXP</a>)&nbsp;and Discover Financial Services (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dfs#NYSE">DFS</a>), indicate a gradual decrease in consumer credit card balances.
This trend aligns with Bernstein&#39;s assessment of improving consumer debt conditions.
In the exchange-traded funds&nbsp;space, funds like iShares iBoxx Investment Grade Corporate Bond ETF (NYSEARCA: LQD) and iShares iBoxx High Yield Corporate Bond ETF (NYSEARCA: HYG) have been influenced by the dynamics of consumer debt&nbsp;given their exposure to corporate bonds.
Investors in these ETFs closely monitor consumer debt trends as they can impact the creditworthiness of corporate issuers.
In conclusion, Bernstein&#39;s insights offer a hopeful perspective on the trajectory of consumer debt in the United States, suggesting&nbsp;the nation is on a path towards greater financial stability in the post-pandemic era.
Now Read:&nbsp;<a href="https://www.benzinga.com/news/23/10/35256397/americans-face-historic-lack-of-affordability-in-housing-market-data-shows" target="_blank">Americans Face Historic Lack Of Affordability In Housing Market, Data Shows</a>
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock.&nbsp;

Personal Finance

US Consumer Debt Moves Toward Pre-COVID Levels: Economist Shares Top Takeaways

Goldman Sachs&#8217; U.S. economist, Jan Hatzius dialed down the U.S. recession risk further in a Tuesday note. The latest insights from the investment giant reveal the 12-month U.S. recession probability now stands at a mere 15%, down 5 percentage points <a href="https://www.benzinga.com/topic/recession">from their previous estimate.</a>
Goldman Sachs&#8217; unwavering optimism in the U.S. economy&#8217;s resilience has been a talking point on Wall Street over the past year. While others have been cautious, if not bearish, Goldman Sachs has remained firmly in the bull camp. The contrast between Goldman Sachs&#8217; 15% U.S. recession probability and the Bloomberg consensus, which indicates a 60% likelihood of recession, is now striking.
<h2 class="wp-block-heading">The US Economy&#8217;s Wildcard: Strong Fundamentals</h2>
Goldman Sachs points to several factors supporting their rosy outlook. They anticipate a resurgence in household real disposable income by 2024, driven by robust job growth and increasing real wages. 
Furthermore, Hatzius stated that he strongly disagrees with the assumption that an increasing and prolonged drag from high interest rates will force the economy into recession.
Despite a slight uptick in unemployment to 3.8% in August, Goldman Sachs remains unfazed. They attribute this rise to an increase in labor force participation and emphasize that key employment indicators remain strong.
Goldman Sachs anticipates the Federal Reserve to take a measured approach. On the one hand, they think that they are done with rate hikes. On the other, they acknowledge that swift interest rate cuts are unlikely unless economic conditions worsen significantly. The bank projects only a gradual rate cut cycle starting in Q2 2024. 
<h2 class="wp-block-heading">Quandary For Investors</h2>
In the wake of Goldman Sachs&#8217; positive stance on the economy, investors are left pondering their investment strategies. 
The equity and credit strategists at the investment bank suggest that the era of strong stock market gains may have peaked.
&#8220;Equity markets have lost momentum in the last month despite the positive economic news.&#8221;
Analysts at Goldman Sachs believe that both investment-grade (IG) and high-yield (HY) bonds will offer excess returns in the upcoming period. 
U.S. IG bonds are tracked by the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>), while HY bonds are tracked by iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>). 
Read now: <a href="https://www.benzinga.com/markets/equities/23/09/34239445/oil-markets-roar-as-saudi-arabia-russia-extend-production-cuts-3-oil-stocks-with-huge-upside-pot">Oil Markets Roar As Saudi Arabia, Russia Extend Production Cuts: 3 Oil Stocks With Huge Upside Potential</a>
Photo: Shutterstock.

Why Goldman Sachs Is Increasingly Confident In Dodging Recession, Contrary To Wall Street Consensus

Salman Ahmed, the global head of macro and strategic asset allocation at Fidelity International, stood firm in his anticipation of an impending recession, even as Wall Street appeared increasingly optimistic about the Federal Reserve&#8217;s potential to orchestrate a soft landing <a href="https://www.benzinga.com/topic/economics">for the U.S. economy.</a>
<h2 class="wp-block-heading">Corporate Debt Refinancing: A Time Bomb Ticking</h2>
Ahmed issued a stark warning about the forthcoming consequences of the central bank&#8217;s tightening of monetary policy, combined with the looming specter of an economic downturn, which he expected to become glaringly evident in 2024.
What&#8217;s causing this potential crisis? A wave of corporate debt refinancing scheduled to unfold over the next six months. 
Ahmed conveyed his concerns in an interview with <a href="https://www.bloomberg.com/news/articles/2023-09-01/fidelity-international-says-wall-of-corporate-debt-to-spark-recession-in-2024?srnd=premium&amp;sref=TBDibEcD">Bloomberg</a>, stating: &#8220;The endpoint of the cycle is recession because the transmission channel will kick in.&#8221;
He emphasized that if the Fed doesn&#8217;t ease off at some point, everyone will have to contend with higher real interest rates.
<h2 class="wp-block-heading">2024 Debt Maturity for U.S. Corporates: An Alarming Figure</h2>
In 2024, almost 9% of the outstanding investment-grade debt is poised to mature. Unless companies reduce their capital requirements, this debt will need to be rolled over at higher interest rates.
The elevated costs associated with servicing this debt typically constrict a company&#8217;s capacity to invest and remunerate its workforce. It is noteworthy that despite the current high stock valuations and narrow credit spreads, the impending downturn might not yet be fully factored into the financial markets. 
Ahmed highlights the magnitude of the challenge, stating, &#8220;A company which financed itself at 2, 3, 4% is going to be financing at 10, 11, 12% now. That&#8217;s a huge shock.&#8221;
<h2 class="wp-block-heading">Preparing for the Storm</h2>
In anticipation of the approaching surge in debt refinancing set to commence in early 2024, Fidelity International adjusted its cash weighting, shifting it to overweight — a notable departure from its neutral position over the preceding two months. 
Cash-like ETFs, such as the SPDR Bloomberg 1-3 Month T-Bill ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BIL#NYSE">BIL</a>) and the iShares 0-3 Month Treasury Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SGOV#NYSE">SGOV</a>), saw a sharp influx<a href="https://www.benzinga.com/markets/bonds/23/08/34157617/investors-bet-7b-on-ultra-short-term-bond-etfs-chase-5-returns-amid-market-volatility"> of money in August. </a>
The firm maintained a cautious stance on stocks, displaying a preference for investment-grade credit — as tracked by the iShares iBoxx $ Inv Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>) — over high-yield credit. Additionally, the company realigned its overweight position on government bonds to neutral for the month of September.
While the resilience of the American economy in the face of rising interest rates led Ahmed to revise his recession projection to the following year and decrease the likelihood from 80% to 60%, he remains convinced that an economic downturn remains an unavoidable eventuality.
His perspective aligned with a recent study conducted by Federal Reserve officials, which indicated it typically takes approximately a year for companies to experience the full impact of prior interest rate hikes, irrespective of future adjustments.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: Shutterstock

Why A Corporate Debt's Ticking Time Bomb Could Make A 2024 Recession Inevitable, Analyst Warns

The bond market has stormed back into the spotlight this week, with Treasury yields at maturity reaching levels unseen <a href="https://www.benzinga.com/markets/bonds/23/08/33972804/risk-free-10-year-bond-promises-53-gain-stocks-brace-for-impact">in over a decade. </a>
The benchmark 10-year yield soared past the 4.30% mark, marking its highest point since November 2007. Simultaneously, the yield on the 30-year long bond surpassed 4.40%, hitting a peak last seen in May 2011.
<h2 class="wp-block-heading">Yield Jitters Prompt Questions About Bond Market Entry</h2>
The swift surge in bond yields has ignited responses from market participants, prompting questions about the optimal timing for entry into the bond market after the challenges endured over the past two years.
Benzinga interviewed Jay Menozzi CFA, the chief investment officer and portfolio manager for Orange Investment Advisors, an affiliate of Easterly Funds, who shed light on the bond market dynamics.
&#8220;The recent sell-off in the long end of the Treasury yield curve seems to have been catalyzed by Fitch&#8217;s downgrade of the U.S. credit rating from AAA to AA+. This downgrade highlighted the funding pressure the Treasury is facing, given the significant supply of treasuries expected to enter the market,&#8221; Menozzi explained. 
He also projected reduced demand for Treasuries by the Federal Reserve and Japanese investors, two major holders of U.S. government bonds.
<h2 class="wp-block-heading">Market Implications and Opportunities Unveiled</h2>
Menozzi delved into the implications of the yield surge on the stock market, noting, &#8220;rising yields tend to affect growth stocks more than value stocks due to the longer duration of growth stocks.&#8221; 
Read also: <a href="https://www.benzinga.com/etfs/sector-etfs/23/08/33969100/value-stocks-outshine-growth-amidst-rising-treasury-yields-key-sectors-and-stocks-analyzed">Value Stocks Outshine Growth Amidst Rising Treasury Yields: Key Sectors and Stocks Analyzed</a>
With the imminent Fed&#8217;s Jackson Hole Symposium, Menozzi hinted at a potential shift towards a slightly more hawkish stance by the Federal Reserve.
&#8220;Bonds are becoming increasingly attractive as yields rise,&#8221; Menozzi said, while emphasizing the potential for attractive total returns in credit markets, despite the short-term volatility. 
<h2 class="wp-block-heading">Investment-Grade Corporate Bonds Emerge as Gems</h2>
Investment Grade corporate bonds, even those rated AAA, are now attainable at yield spreads over Treasuries spanning hundreds of basis points, Menozzi stated. 
The effective yield on the corporate investment-grade universe, tracked by the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>), has climbed to 5.9%, reaching its zenith since November 2022, currently offering 130 basis points of spread over Treasuries. 
&#8220;Focusing on the upper part of the capital structure allows us to harness these attractive yields while minimizing exposure to undue credit risk. By positioning investments smartly within the bond market, one can potentially capitalize on the current opportunity,&#8221; Menozzi said.
Chart: US High-Grade Corp. Effective Yield 
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="749" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/22153829/BAMLC0A0CMEY_2023-08-22_21-38-02_2f81e-1024x749.png" alt="" class="wp-image-92398" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/22153829/BAMLC0A0CMEY_2023-08-22_21-38-02_2f81e-1024x749.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/22153829/BAMLC0A0CMEY_2023-08-22_21-38-02_2f81e-300x220.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/22153829/BAMLC0A0CMEY_2023-08-22_21-38-02_2f81e-768x562.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/22153829/BAMLC0A0CMEY_2023-08-22_21-38-02_2f81e.png 1476w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Now read: <a href="https://www.benzinga.com/money/how-to-buy-corporate-bonds">How to Buy Corporate Bonds</a>
Photo: Shutterstock

Exclusives

EXCLUSIVE: Yield Surge Reveals Investment-Grade Corporate Bonds As Potential Goldmine

Fitch Ratings emphasizes that the foremost concern for the global credit landscape remains centered on persistently high <a href="https://www.benzinga.com/economics/macro-economic-events/23/08/33883297/inflation-concerns-rekindle-rate-hike-debate-what-5-top-economists-say-after-july">inflation and interest rates.</a>
The credit rating agency highlighted in its recent Risk Headquarters report that despite a recent decrease in headline inflation rates across the U.S. and eurozone during the second quarter of 2023, core inflation surpassed central bank targets.
The overall macroeconomic picture has improved. However, Fitch acknowledges the presence of potential headwinds. Tighter lending conditions and a more cautious approach taken by central banks contribute to a gloomy economic outlook.
Fitch's base-case forecasts predict &#8220;a shallow recession in the US, limited growth in the eurozone and building risks to China's recovery.&#8221;
<h3 class="wp-block-heading">Cracks In The Real Estate Sector Emerge</h3>
Fitch specifically draws attention to vulnerabilities in the commercial real estate (CRE) sector and the challenges that could hinder China&#8217;s post-pandemic recovery. 
Notably, property data from the second quarter of 2023 reveals a notable decline in property sales in China, alongside ongoing pressures faced by property developers. 
This, in turn, poses risks to the sustained acceleration of <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/08/33860926/chinas-central-bank-takes-surprising-step-as-economy-falters-why-americans-should-c">China&#8217;s economic growth.</a> 
The commercial real estate sector in the U.S. also faces difficulties. Several prominent mortgage real estate investment trusts (REITs) are reducing new lending, accompanied by weaker performance results from both large and regional U.S. banks.
<h3 class="wp-block-heading">Bond Market Volatility Persists Amidst Rising Treasury Yields</h3>
Recent sessions have witnessed substantial pressures on the bond market, leading to a surge in Treasury yields, particularly in longer-term maturities. 
The benchmark 10-year Treasury yield has exceeded 4.30%, approaching the previous peak of 4.33% seen in October 2022, which was last observed in October 2007.
Exchange-traded funds (ETFs) tracking longer-term Treasury bonds have also encountered challenges. The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>), known for its sensitivity to the so-called &#8216;duration risk&#8217;, recorded a 0.6% decline on Thursday, on track for the fourth consecutive week of losses, possibly setting the stage for revisiting lows witnessed in 2022.
Chart: iShares 20+ Year Treasury Bond ETF On Track To Revisit 2022 Lows 
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="1000" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112820/TLT_2023-08-17_17-27-34_9d704-1024x1000.png" alt="" class="wp-image-89539" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112820/TLT_2023-08-17_17-27-34_9d704-1024x1000.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112820/TLT_2023-08-17_17-27-34_9d704-300x293.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112820/TLT_2023-08-17_17-27-34_9d704-768x750.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112820/TLT_2023-08-17_17-27-34_9d704.png 1106w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
The volatility has also extended to corporate bonds issued by U.S. companies. The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>) fell to the lowest since early November 2022. 
The effective yield on high-grade U.S. corporate bonds spiked to 5.83%, marking the highest level since November 2022. Notably, bonds issued by Ely Lilly &amp; Company (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LLY#NYSE">LLY</a>), rated A+ by S&amp;P and A1 by Moody&#8217;s, and maturing in March 2045, experienced a 5.43% drop on the day, falling to 79 cents on the dollar.
Other longer-dated corporate bonds also faced losses, including Elevance Health Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ELV#NYSE">ELV</a>) 4.65% maturing in 2044, which fell 4.7%, and American International Group Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AIG#NYSE">AIG</a>) 4.7% maturing in 2035, which declined by 3.6%.
Chart: U.S. High-Grade Corporate Bond Yields Surge To The Highest Since November 2022
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="724" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112953/BAMLC0A0CMEY_2023-08-17_17-29-12_0b7ac-1024x724.png" alt="" class="wp-image-89540" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112953/BAMLC0A0CMEY_2023-08-17_17-29-12_0b7ac-1024x724.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112953/BAMLC0A0CMEY_2023-08-17_17-29-12_0b7ac-300x212.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112953/BAMLC0A0CMEY_2023-08-17_17-29-12_0b7ac-768x543.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/17112953/BAMLC0A0CMEY_2023-08-17_17-29-12_0b7ac.png 1527w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read now: <a href="https://www.benzinga.com/markets/equities/23/08/33895342/market-sentiment-teeters-as-us-indices-including-s-p-500-break-key-supports-key-levels-to-watch">Market Sentiment Teeters As US Indices, Including S&amp;P 500, Break Key Supports: Next Levels To Watch</a>

streetTRACKS Dow Jones U.S. Large Cap Value Index Fund

Fitch Flags Major Credit Risks Amid Sticky Inflation and High Interest Rates: Bond Market Turmoil Persists

Both the stock market and the bond market will be significantly affected by the upcoming <a href="https://www.benzinga.com/general/education/22/04/25718901/what-is-the-fomc" target="_blank">Federal Reserve&#39;s interest rate decision.&nbsp;</a>
The market is now nearly fully pricing in a 25-basis-point raise to 5%-5.25%, according to the CME Group Fedwatch tool, but what the Fed hints to do&nbsp;beyond May is what keeps investors on alert.&nbsp;
The market&#39;s attention will mostly be directed at determining if this is the Federal Reserve&#39;s last&nbsp;rate hike in the current cycle,&nbsp;or whether Fed Chair Jerome Powell will leave the door open for an additional increase in June.&nbsp; 
The second hypothesis would cause heavy&nbsp;market fluctuations, since this scenario is not&nbsp;discounted by&nbsp;investors, who expect the Fed to conclude its rate increases in May.&nbsp;
How U.S. Treasuries Could React To The Fed&#39;s Meeting
The yield on the two-year Treasury note is currently at 4%, while that on the 10-year benchmark is at 3.46% as the May FOMC meeting approaches.
If the Fed suggests that rate hikes have ended and adopts a rather gloomy perspective on the economy&nbsp;and the labor market, U.S. Treasury yields are projected to fall further, driving up the price of U.S. government bonds.
A hawkish Fed, with Chair Powell rejecting current market expectations of a pause in June and the start of rate cuts later this year, would likely be detrimental to the Treasury market, as rates would rise to reflect the Fed&#39;s higher-for-longer attitude on interest rates.
5 Bond ETFs to Keep an Eye On Ahead of the May FOMC Meeting
&bull; iShares 1-3 Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/shy#NASDAQ">SHY</a>)
The iShares 1-3 Year Treasury Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>) that invests in U.S. Treasury securities with maturities higher than or equal to one year but less than three years.
As a result, SHY is sensitive to short-term Fed interest rate speculation, although its volatility is normally limited due to its short duration.
When an unexpected negative shock strikes the market and leads the Fed to become more dovish, it is one of the assets that tend to increase because investors regard it as a safe haven.
SHY has risen 1% thus far in 2023&nbsp;and has recorded outflows&nbsp;of $352 million over the last&nbsp;month.
&bull;&nbsp;iShares 20+ Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>)
The iShares 20+ Year Treasury Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock that invests in U.S. Treasury securities with maturities higher than 20 years.
As a result of its high&nbsp;duration, TLT is very sensitive to medium-term Fed interest rate expectations and often shows heightened volatility to interest-rate shifts.
When recessionary shocks hit the economy and induce a decrease in inflation expectations, this asset appreciates significantly.
TLT has risen 4.1% year to date and has attracted inflows of $1.8&nbsp;billion over the last month.&nbsp;
Read next: <a href="https://www.benzinga.com/money/how-to-buy-treasury-bonds" target="_blank">How to Buy Treasury Bonds</a>
&bull;&nbsp;iShares iBoxx $ Investment Grade Corporate ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>)
The iShares iBoxx $ Investment Grade Corporate Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock that invests in investment-grade corporate bonds with at least three&nbsp;years to maturity.
Investors sometimes flee to the fixed rates of safer corporate bonds during moments of risk-off in the stock markets
LQD has risen 2.7% year to date and has attracted outflows of $720 million over the last month.&nbsp;
&bull;&nbsp;iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>)
The iShares iBoxx $ High Yield Corporate Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock that invests in high-yield corporate bonds with maturities of at least one year and less than 15 years.
Due to its exposure to junk corporate bonds, HYG is a more volatile investment that tends to follow&nbsp;the sentiment on&nbsp;global stock markets.
Periods of abundant liquidity and limited&nbsp;corporate defaults are a&nbsp;perfect environment&nbsp;for HYG to grow, yet&nbsp;when interest rates rise and there is anxiety about widespread defaults in the corporate sector, HYG declines.
HYG is up 1.1% year to date and attracted inflows of&nbsp;$2.07 billion over the last month.
&bull;&nbsp;iShares J.P. Morgan USD Emerging Market (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>)
The iShares J.P. Morgan USD Emerging Markets Bond ETF is an exchange-traded fund managed by BlackRock International Limited and BlackRock Fund Advisors that invests in USD-denominated bonds of emerging countries across the globe&nbsp;and seeks to replicate the performance of J.P. Morgan EMBI Global Core Index.
EMB is also a highly volatile bond ETF that is also tightly correlated to HYG given its &quot;risk-on&quot; profile.&nbsp;Therefore, lower Fed interest rates and prospects of abundant liquidity in markets are what send&nbsp;EMB higher. On the other hand, higher U.S. Interest rates and rising Treasury yields represent major headwinds.
EMB has gained 0.4% year to date and has registered outflows of $215 million over the last month.
Now Read:&nbsp;<a href="https://www.benzinga.com/economics/macro-economic-events/23/05/32165610/investors-reduce-2023s-rate-cut-bets-ahead-of-fomc-analysts-now-expect-fed-on-haw">Investors Reduce 2023 Rate Cut Bets Ahead Of FOMC: Analysts Now Expect Fed On Hawkish-Hold Mode For Longer</a>
Some elements of this story were previously reported by Benzinga and it has been updated.

iShares Trust Barclays 1-3 Year Treasury Bond Fund

As Key Fed Interest Rate Decision Approaches: Here Are 5 Bond ETFs To Keep An Eye On

The risk appetite of investors remains depressed, not far from the extreme pessimism of 2022 and comparable to the levels of the 2009 Great Financial Crisis, according to the most recent Global Fund Manager Survey (FMS) conducted <a href="https://www.benzinga.com/news/earnings/23/04/31853910/bank-of-america-outshines-projections-q1-16-earnings-beat-fuels-share-price-rally" target="_blank">by Bank of America.</a>
BofA&#39;s overall risk sentiment barometer, which takes into account&nbsp;growth expectations, as well as equities and cash allocations, became increasingly pessimistic in April, reaching the most negative levels thus far in 2023.&nbsp;
Another sign of the defensive&nbsp;stance of global fund managers is the strong&nbsp;underweight in equities relative to bonds, which is at levels not seen since the Great Financial Crisis.
BofA Sees &quot;Pain Trades&quot; If Recession Doesn&#39;t Materialize
&quot;Bear sentiment is still&nbsp;contrarian&nbsp;supportive for&nbsp;risk assets&quot; according to Bank of America chief investment<a href="https://www.benzinga.com/topic/michael-hartnett" target="_blank"> strategist Michael Hartnett</a>. The expert predicted &quot;pain trades&quot; in rising bond yield and a rally in bank equities and REITs (where there is presently a great deal of pessimism)&nbsp;if the consensus expectation for a recession is not soon realized in the second quarter. &quot;If the recession hits in six&nbsp;months rather than six&nbsp;weeks, contrarian trades for April-May based just on FMS positioning&nbsp;include long US dollar,&nbsp;short gold, long banks-short bonds, long HY-short IG bonds, and long real estate-short tech,&quot; he said.&nbsp;
Also Read:&nbsp;<a href="https://www.benzinga.com/general/gaming/23/04/31834626/zuckerberg-splurges-meta-vr-developer-annual-salary-more-than-average-american-worker-makes-in-10-">Zuckerberg Splurges: Meta VR Developer Annual Salary More Than Average American Worker Makes In 10 Years</a>
Key Takeaways From BofA Global FMS
<ul>
<li>The BofA Global FMS polled 249 global institutional professionals in April, including 128 portfolio managers, 66 strategists/economists, 40 chief investment officers, and 15 others.</li>
<li>A net 63% of investors anticipate a worsening economy, up 13 percentage points month-on-month to the gloomiest level since December 2022.&nbsp;</li>
<li>Thirty-five percent of investors believe the Fed will begin an easing cycle in Q1 2024, 28% in Q4 2023, 14% in Q3 2023, and 10% in Q2 2024.</li>
<li>Eighty-nine percent&nbsp;of FMS investors expect above-trend inflation over the next 12 months, down from 92% in March 2023 but still much higher than anything observed since the run-up to the 2008 GFC.</li>
<li>Thirty percent of investors think that &quot;Long Big Tech Stocks,&quot; a segment of the market tracked by the Technology Select Sector SPDR Fund (ARCA: XLK), is&nbsp;the most crowded trade&nbsp;in April 2023.</li>
<li>Half of FMS investors think IG bonds, which are tracked by the iShares iBoxx $ Investment Grade Corporate Bond ETF (ARCA: LQD), will outperform HY bonds, which are tracked by the iShares iBoxx $ High Yield Corporate Bond ETF (ARCA: HYG),&nbsp;over the next year, the highest level on record.</li>
<li>A bank credit crunch and&nbsp;global recession were considered the highest tail risk&nbsp;in April, according to more than a third of investors.</li>
<li id="P04671FEE">The second most feared risk was high inflation keeping central banks hawkish, just marginally lower than the credit crunch.</li>
<li>Investors are the most bearish&nbsp;on&nbsp;real estate since July 2009.&nbsp;Half of FMS&nbsp;investors&nbsp;think that US/EU commercial real estate&nbsp;(CRE)&nbsp;is the most likely source of a credit event.</li>
</ul>
Read next: <a href="https://www.benzinga.com/news/23/04/31881783/morgan-stanleys-jim-caron-says-credit-crunch-to-unfold-slowly-over-time-not-a-sudden-shock-event" target="_blank">Morgan Stanley&#39;s Jim Caron Says Credit Crunch To Unfold Slowly Over Time: &#39;Not A Sudden Shock Event&#39;</a>

Short Ideas

BofA Fund Manager Survey: Investors Underweight In Stocks Reaches 2009 Crisis Levels

Yields on treasury notes are pulling back from their 2022&nbsp;highs, while&nbsp;the stock market <a href="https://www.benzinga.com/trading-ideas/long-ideas/22/12/29941589/what-bear-market-the-dow-is-officialy-in-a-bull-market-and-the-s-p-500-may-follow-suit">appears to be recovering</a> from its 9-month-long bear run.
The yield&nbsp;on the 3-year treasury hovers just below the&nbsp;4% mark, down 14% from this year&#39;s peak&nbsp;in&nbsp;mid-October and early November.
As compared to their latest high mark in November, yields are down 10% for the 2-year note, 16.6% for the 5-year note and 16.8% for the 10-year note, but still remain at their highest levels in over a decade.
Rising Treasury yields can be interpreted as a bad omen for the stock market, as&nbsp;treasury notes become more attractive to investors. This can cause&nbsp;some to turn away from investments that are deemed riskier&nbsp;than the safe and normally nonvolatile returns on bonds.
Related: <a href="https://www.benzinga.com/news/22/08/28624116/set-your-clock-to-it-2022s-sure-fire-signal-on-when-to-sell-stocks">&#39;Set Your Clock To It&#39;: 2022&#39;s Reliable Signal For When To Sell Stocks</a>
But more powerful macroeconomic factors are also at play.&nbsp;The S&amp;P 500 index, considered a gauge for the entire equity&nbsp;market, has been rising&nbsp;since early October and the Dow Jones Industrial Average <a href="https://www.benzinga.com/trading-ideas/long-ideas/22/12/29941589/what-bear-market-the-dow-is-officialy-in-a-bull-market-and-the-s-p-500-may-follow-suit">officially left bear territory last week</a>.
The tech sector, which has been among the hardest hit during the 2022 bear market, is beginning to show signs of recovery. The Nasdaq Composite &mdash;encompassing many of the largest tech companies including Apple, Microsoft, Amazon, Meta, Alphabet&nbsp;and Tesla&nbsp;&mdash; is up almost 10% since the October low.
While the yield of treasury bonds continues to rise, investors are fleeing away from corporate bond market ETFs. Last week, the iShares iBoxx $ Investment Grade Corporate Bond ETF (ARCA: LQD) <a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29910787/investors-abandoning-healthy-companies-at-fastest-past-in-history-is-the-fed-to-bla">experienced a record $3 billion in outflows</a> in the largest single-day exodus since the fund was launched in 2002.
Meanwhile, the rise of the major indexes&nbsp;since October points toward investors seeing an uptick in the equity risk premium, or the measure by which the benefit of investing in stocks outweighs its risk, when compared to investing in&nbsp;a relatively risk-free asset like treasury notes.
But with the 10-year note yield at 3.5%, investors continue to see the&nbsp;allure of bonds, which is why both the stock market and the bonds market are seeing a rise in demand.
Benzinga&rsquo;s take: As bond yields have&nbsp;begun to fall over the past month, stocks have become more attractive, evolving into a feedback loop that could turn out positively for the equity space.
Although it remains unclear how the recent market and treasury yield dynamics will be affected by another key part of the equation:&nbsp;the Fed&#39;s decisions&nbsp;<a href="https://www.benzinga.com/news/22/12/29944329/whats-next-for-stocks-after-fed-chair-powell-says-smaller-interest-rate-hikes-could-start-in-decembe">on hiking interest rates in&nbsp;December and next year</a>.
Photo: Courtesy of shutterstock.

Treasury Yields Have Started Falling, Can The Markets Breath A Sigh Of Relief?

Ken Fisher founded Fisher Asset Management in 1979, and now has north of $197 billion in assets under management, with more than 100,000 clients around the world. Fisher Asset Management is a fee-only investment adviser and money management firm serving large institutions, high-net-worth individuals, and small business <a href="https://www.benzinga.com/news/large-cap/22/12/29895418/a-philanthropic-activist-investor-maintains-stakes-in-2-canadian-railroad-stocks-paying-dividends">retirement plans globally.</a>
Fisher is currently the executive chairman and co-CIO, after stepping down from the role of CEO, a position he held&nbsp;for 37 years. Additionally, Fisher began writing a monthly column for Forbes in 1984, around the same time his bestselling book &quot;Super Stocks&quot;&nbsp;gained massive attention. Fisher wrote the &quot;Forbes Portfolio Strategy&quot; column for over 32 years until Dec. 31, 2016, making him the longest-running columnist in Forbes&rsquo; history.
Fisher is buying these two high-yielding exchange traded funds (ETFs) as we head into the end of the year.
Also Read:&nbsp;<a href="https://www.benzinga.com/government/22/11/29733838/several-developed-nations-allied-groups-come-together-with-10b-backing-for-indonesias-efforts-on-dec">Several Developed Nations, Allied Groups Come Together With $10B Backing For Indonesia&#39;s Efforts On Decarbonization</a>
iShares iBoxx $ Investment Grade Corporate Bond ETF (ARCA: LQD) is offering a dividend yield of 3.13% or $3.40 per share annually, conducting monthly payments, with an inconsistent track record of increasing its dividends. The iShares iBoxx Investment Grade Corporate Bond ETF seeks to track the investment results of an index composed of U.S. Dollar-denominated, investment-grade corporate bonds. The ETF gives you access to over 1,000 corporate bonds in a single fund, and its top three holdings include JPMorgan Chase (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jpm#NYSE">JPM</a>), Bank of America (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bac#NYSE">BAC</a>), and Goldman Sachs Group (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gs#NYSE">GS</a>).
In the third quarter, Fisher increased its stake in the iShares iBoxx Investment Grade Corporate Bond ETF by roughly 41% to over 22 million shares.
More on LQD:<a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29910787/investors-abandoning-healthy-companies-at-fastest-past-in-history-is-the-fed-to-bla">&nbsp;Investors Abandoning Healthy Companies At Fastest Past In History: Is The Fed To Blame?</a>
iShares MSCI Europe Financials Sector Index Fund (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/eufn#NASDAQ">EUFN</a>) is offering a forward dividend yield of 7.61% or $1.34 per share annually, through semiannual payments, with a track record of increasing its dividends once in the past year. The iShares MSCI Europe Financials Sector Index Fund seeks to track the investment results of an index composed of developed market European equities in the financials <a href="https://www.benzinga.com/money/best-sectors-to-invest-in-right-now/">sector</a>. The ETF&rsquo;s top three holdings include HSBC Holdings (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hsbc#NYSE">HSBC</a>), Allianz (OTCPK: ALIZF), and Zurich Insurance Group (OTCQX: <a class="ticker" href="https://www.benzinga.com/stock/zfsvf#OTCQX">ZFSVF</a>).
Fisher increased its stake in the iShares MSCI Europe Financials Sector Index Fund by 125% to over 39.2 million shares during <a href="https://www.benzinga.com/news/22/11/29575037/hsbcs-top-shareholder-supports-splitting-up-the-banking-giant">the third quarter.</a>
Now Read:&nbsp;<a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/12/29935877/elon-musk-vs-tim-cook-feud-gets-over-in-a-heartbeat-analyst-says-we-were-just-serve">Elon Musk Vs. Tim Cook Feud Gets Over In A Heartbeat: Analyst Says We Were Just Served &#39;Masterclass In Crisis Management&#39;</a>

Dividends

Eurozone

Hedge Funds

General

Allianz Ag Muenchen Namen-Akt Vinkuliert Shares

ALIZF

iShares MSCI Europe Financials Sector Index Fund

EUFN

HSBC

ZFSVF

This Hedge Funder With Over $197B Under Management Just Increased His Stake In 2 High Yielding ETFs

The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>) experienced a record $3 billion in outflows on Monday, the largest single-day exodus since the fund was launched <a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29871500/recession-watch-bank-of-america-says-us-economic-breakdown-could-come-at-any-time">back in 2002.</a>
Monday&#39;s big sell-off came after the LQD fund had registered <a href="https://www.bloomberg.com/news/articles/2022-11-29/ishares-credit-etf-sees-record-3-billion-exodus-in-abrupt-risk-reversal?leadSource=uverify%20wall">six straight</a> weeks of inflows on investor optimism that the Federal Reserve will begin dialing back its interest rate hikes starting in December.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29871500/recession-watch-bank-of-america-says-us-economic-breakdown-could-come-at-any-time">Recession Watch: Bank Of America Says US Economic Breakdown &#39;Could Come At Any Time&#39;</a> 
Just one week ago, the bond market was pricing in only a 24.2% chance the Fed will announce a fifth consecutive 0.75% rate hike in December. Today, the bond market is pricing in a 34.9% chance of a 0.75% rate hike.
Risk Ahead In 2023: Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said Wednesday that investors expecting the Fed to pivot to rate cuts in 2023 are playing a dangerous game.
&quot;Bond markets have priced in much more risk than stock markets, and the risk in 2023 lies in the parts of the stock market (those companies with above average P/E ratios, those with lower or a lack of current profitability, and those that are interest rate sensitive), so we would remain cautious, despite the damage that has already been inflicted this year,&quot; Zaccarelli said.
Related Link: <a href="https://www.benzinga.com/news/22/11/29844482/slower-interest-rate-hikes-will-likely-soon-be-appropriate-fed-minutes">Slower Interest Rate Hikes Will &#39;Likely Soon Be Appropriate&#39;: Fed Minutes</a>
The LQD fund traded slightly lower on Wednesday and is now down 0.5% in the past five days and 18.9% year-to-date, its worst annual performance ever. Much of that selling pressure has been driven by the Fed, which has significantly increased the cost of capital by aggressively raising interest rates in its battle against inflation.
Benzinga&#39;s Take: The SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>) and the LQD fund have both been surprisingly resilient in the past two months, given expectations for multiple additional Fed rate hikes and expectations the U.S. economy could dip into a recession in the first half of 2023. Since Sept. 30, the SPY fund has generated a total return of 10.6%, while the LDQ fund has generated a total return of 4.5%.
Now Read:&nbsp;<a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29900235/tesla-deserves-higher-valuation-for-optionality-value-says-analyst-highlights-these">Tesla Deserves Higher Valuation For &#39;Optionality Value,&#39; Says Analyst &mdash; Highlights These Revenue Drivers&nbsp;</a>
Photo: Courtesy of shutterstock.

Investors Abandoning Healthy Companies At Fastest Past In History: Is The Fed To Blame?

Investors often short stocks to hedge positions against long positions or as a way to bet against a particular company. Benzinga provides a look at the <a href="https://www.benzinga.com/short-interest/most-shorted">most shorted stocks here.</a>
Exchange traded funds offer investors a way to get exposure to the overall market, certain sectors or countries by providing an investment of a basket of stocks.
A new report from S3 Partners and managing director of predictive analytics Ihor Dusaniwsky shows the most shorted ETFs, which ETFs have the highest short interest and which ETFs saw the biggest inflows of new shorts in the last 30 days.
Top Shorted ETFs: The report dives into the most shorted ETFs, and many of them are familiar names that cover the overall broader market. Other names are related to certain sectors.
Overall, there is $214.3 billion in short interest in 3,350 ETFs tracked by S3, down from $215 billion 30 days ago.
ETFs have an average of 16.4% short interest and cost to borrow of $1.02%. This compares to average short interest of 4.86% for U.S. stocks and a cost to borrow of 0.65%.
1. SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>): $53.7 billion short, 14.28% short float, 0.3% cost to borrow
2. Invesco QQQ Trust (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>): $20.2 billion short, 12.47% short float, 0.3% cost to borrow
3. iShares Russell 2000 (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>): $18.4 billion short, 33.22% short float, 0.94% cost to borrow
4. iShares iBoxx High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>): $6.8 billion short, 38.8% short float, 2.82% cost to borrow
5. iShares MSCI Emerging Markets (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/em#NYSE">EM</a>): $5.1 billion short, 22.96% short float, 0.3% cost to borrow
6. SPDR Energy Select Sector ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xle#NYSE">XLE</a>): $4.4 billion short, 9.82% short float, 0.3% cost to borrow
7. iShares MSCI EAFE ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/efa#NYSE">EFA</a>): $3.7 billion short, 8.22% short float, 0.3% cost to borrow
8. iShares iBoxx Investment Grade Corporate Bond (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>): $3.6 billion short, 8.88% short float, 0.3% cost to borrow
9. SPDR Financial Select Sector (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlf#NYSE">XLF</a>): $2.9 billion short, 8.85% short float, 0.3% cost to borrow
10. SPDR S&amp;P Biotech (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xbi#NYSE">XBI</a>): $2.8 billion short, 34.86% short float, 0.94% cost to borrow
Related Link: <a href="https://www.benzinga.com/news/22/11/29805045/paxmedica-getty-images-and-3-short-squeeze-candidates-that-could-soar-this-week">Paxmedica, Getty Images And 3 Short Squeeze Candidates That Could Soar This Week&nbsp;</a>
ETFs With Short Interest&nbsp;Rising: The report from S3 shows that investors are increasing their short bets in the ETF space in sectors like semiconductors and fixed income. Investors are also increasing short positions in ETFs covering specific countries.
The 5 ETFs that saw the biggest increase in short positions in the last 30 days are:
1. iShares iBoxx High Yield Corporate Bond ETF: $994.8 million added
2. VanEck Semiconductor ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/smh#NASDAQ">SMH</a>): $462&nbsp;million added
3. iShares Core MSCI Total International Stock ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/ixus#NASDAQ">IXUS</a>) $379.8 million added
4. SPDR Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dia#NYSE">DIA</a>): $378.9 million added
5. iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>): $284.5 million added
Outside of the top five ETFs with increased short&nbsp;interest, two regional ETFs were among the 10 with the largest increases.
The iShares MSCI South Korea ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ewy#NYSE">EWY</a>) saw an increase of $229.5 million in short interest in the last 30 days. The ETF now has $713.2 million in short interest, or around 22.75% of the float.
The iShares MSCI Brazil ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ewz#NYSE">EWZ</a>) saw an increase in $225.5 million in short interest in the last 30 days. The ETF now has $1.3 billion in short interest, or around 25.35% of the float.
Highest Short Interest By Percentage: Outside of the large dollar amounts that are short particular ETFs, an indication of a high short percentage of the float could also indicate sectors and countries that are being bet against.
Here are the ETFs with the highest short interest by percentage:
1. SPDR S&amp;P Retail ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xrt#NYSE">XRT</a>): 193.88% short float, $1.1 billion total short
2. SPDR Series Trust SPDR Homebuilders ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xhb#NYSE">XHB</a>): 57.75% short float, $610.4 million total short
3. SPDR S&amp;P Oil &amp; Gas Explorer &amp; Product (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xop#NYSE">XOP</a>): 52.90% short float, $2.8 billion total short
4. iShares U.S. Home Construction ETF (BATS: <a class="ticker" href="https://www.benzinga.com/stock/itb#BATS">ITB</a>): 46.39% short float, $557.5 million total short
5. iShares iBoxx High Yield Corporate Bond ETF: 38.8% short float, $6.8 billion total short
Most Crowded Short ETFs: Another indicator of bets against an ETF covering a particular sector or region could be combining the short interest by dollars, short float percent and cost to borrow. S3 ranks the five most crowded ETFs for short interest using a scoring system.
1. SPDR S&amp;P Retail ETF 
(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ewco#NYSE">EWCO</a>)
2. iShares iBoxx High Yield Corporate Bond ETF
3. SPDR S&amp;P Oil &amp; Gas Explorer &amp; Product
4. SPDR S&amp;P Biotech
5. Invesco S&amp;P 500 Equal Weight Communication Services 
Read Next: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29789195/block-is-the-most-shorted-crypto-stock-how-do-coinbase-microstrategy-compare">Block Is The Most Shorted Crypto Stock, How Do Coinbase, MicroStrategy Compare</a>
Photo via Shutterstock.&nbsp;

Penny Stocks

SPDR Dow Jones Industrial Average ETF Trust

EWCO

iShares Dow Jones US Homenstruction Index Fund

IXUS

The 10 Most Shorted ETFs: Which Sectors Saw Short Interest Increase?

On August 22, BlackRock Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>) unveiled three new fixed income exchange traded funds, offering investors a BuyWrite strategy on fixed income assets.
BlackRock&rsquo;s New ETFs: The iShares Trust 20+ Year Treasury Bond BuyWrite Strategy ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tltw#NYSE">TLTW</a>), iShares High Yield Corporate Bond BuyWrite Strategy ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hygw#NYSE">HYGW</a>), and iShares High Yield Corporate Bond BuyWrite Strategy ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqdw#NYSE">LQDW</a>).
The BuyWrite strategy seeks to invest in the selected ETFs by purchasing the underlying asset, while simultaneously writing (selling) a covered call option on that security which expires in 30 days. With the purpose of generating income from the option premiums.
Each month, the current option will be repurchased one business day before expiry, and a new one-month option will be written.
<a href="https://www.benzinga.com/news/small-cap/22/08/28536506/brief-recession-or-complete-economic-collapse-what-these-wall-street-veterans-think">BlackRock&rsquo;s</a> BuyWrite exchange traded funds will seek to pay monthly distributions that include both the option premiums received and the underlying ETF dividends.
During certain market conditions, the BuyWrite strategy tends to enhance and stabilize income, while reducing the overall risk in the portfolio.
When<a href="https://www.benzinga.com/news/22/07/28184530/morgan-stanley-views-differ-from-jpmorgan-on-federal-reserves-policy-outlook-bloomberg"> interest rates</a> rise and the spread widens, BlackRock&rsquo;s BuyWrite Strategy ETFs will outperform the underlying exchange traded funds.
Go To:&nbsp;<a href="https://www.benzinga.com/m-a/22/08/28529951/blackrock-to-pledge-a-1b-in-australian-battery-storage-assets-report">BlackRock To Pledge A$1B In Australian Battery Storage Assets - Report</a>
The underlying exchange traded funds used are the iShares 20+ Year Treasury Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NYSE">TLT</a>), iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>), and the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>).
Stephen Laipply, U.S. Head of Bond ETFs at BlackRock commented, &ldquo;Our buy-write exposures expand the functionalities of bond ETFs by unlocking a sophisticated use case with a potential to enhance income for investors in this <a href="https://www.benzinga.com/money/most-volatile-stocks/">volatile</a> yield environment.&rdquo;

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