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The bond market is showing new signs of unpredictability as expectations over Fed rate cuts shift with every new piece of economic data.

Bond Traders Think Interest Rate Cuts Are Ahead, But One Caveat Keeps Yields Above 4%

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Vanguard is a leader in ETFs, known for stability and low costs. Despite its impressive portfolio, it does not offer a Bitcoin ETF.

5 Things You Need To Know About Vanguard ETFs: Why There&#39;s No Bitcoin ETF In Their Lineup?

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As 2023 concludes, the bond market has witnessed a remarkable rally, bolstered by the strength of the U.S. economy and a reduction in inflationary pressures.

Investor Optimism Tested: Navigating 2024 Bond Market&#39;s Uncertain Terrain

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The bond market is showing new signs of unpredictability as expectations over Fed rate cuts <a href="https://www.benzinga.com/opinion/24/03/37938028/exclusive-interest-rates-rode-the-elevator-up-but-analyst-predicts-theyll-take-the-stairs-coming-dow">shift with every new piece of economic data</a>.
Last week, Fed Chair Jerome Powell acknowledged that <a href="https://www.benzinga.com/economics/macro-economic-events/24/03/37857035/fed-chair-powell-opens-door-to-rate-cuts-this-year-downplays-recent-inflation-upt">rate cuts for this year are being decided on a meeting-by-meeting basis</a>. Therefore, it's not possible to predict how much the cost of borrowing will drop in 2024.
However, some investors <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37900527/federal-reserve-pushes-stocks-to-record-highs-as-rate-cuts-loom-nvidia-rallies-appl">continue to price in at least three rate cuts this year</a>. This took the S&amp;P 500 and other market gauges to record heights last week.
Investors priced in significant rate cuts for 2024 during the first two months, as inflation showed consistent signs of easing. 
But rising prices from February's CPI report came in <a href="https://www.benzinga.com/markets/equities/24/03/37615483/inflation-rises-more-than-expected-to-3-2-rebuffs-expectations-of-june-fed-rate-cut">above economist expectations</a>. And stronger than expected economic activity shows that inflation could be harder to tame than many had hoped.
Meanwhile, the fear of <a href="https://www.benzinga.com/markets/equities/24/01/36614222/stagflation-in-2024-red-sea-crisis-could-trigger-domino-effect-for-global-costs">stagflation</a> is weighing on optimism. 
Read Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37940764/commodities-poised-for-comeback-in-investor-portfolios-this-time-is-different-strat">Commodities Poised For Comeback In Investor Portfolios: &#8216;The Future Could Be Different,&#8217; Strategist Says</a>
How Treasury Notes Are Reacting: Treasury yields, which come down with interest rate cuts, continue to hang on attractive levels.
The yield on the 10-year U.S. The Treasury note was 4.25% on Tuesday, keeping the cost of borrowing money high for prospective homebuyers looking to get into a mortgage, as well as for corporate borrowers.
The 30-year fixed mortgage rate is still gravitating around 7%, which is <a href="https://www.benzinga.com/markets/equities/24/03/37855254/are-you-a-housing-market-lock-in-high-mortgage-rates-result-in-people-not-living-in-homes-they-w">negatively affecting the U.S. housing market</a>.
Yields on Treasury assets set the floor on mortgages and the general cost of borrowing, as mortgage lenders keep interest rates above bond yields in order to attract similar investors, who would otherwise just decide to invest in Treasury notes.
Yields on the 10-year note peaked at 5% in October of last year. They quickly dropped as it became apparent that the Fed's monetary policy was working. The 10-year Treasury yield went from 3.86% at the start of the year to today's 4.25%.
Investors today are <a href="https://www.wsj.com/finance/investing/treasury-yields-rising-fed-interest-rate-expectations-4a157a85?mod=hp_lead_pos11">more</a> moderate in their rate cut expectations. Current yields continue to reflect expectations that the Fed will cut rates in the future. They are now expecting that prediction to come true on a longer timescale.
Investors continue to expect yields to drop. The only thing that could take yields back to October's heights would be if the market receives very strong signals of economic acceleration, taking inflation back up again.
Retail investors can gain diversified exposure to the bond market by purchasing bond ETFs. The largest ones include Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>), iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) and iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>).
Now Read:<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37891092/5-technologies-that-could-be-worth-220-trillion-by-2030-cathie-woods-ark-predicts-t"> 5 Technologies That Could Be Worth $220 Trillion By 2030, Cathie Wood&#8217;s ARK Predicts &#8211; &#8216;The Time Is Now&#8217;</a>
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Vanguard has become a towering figure <a href="https://www.benzinga.com/etfs">in the world of exchange-traded funds (ETFs)</a>. 
As investors increasingly turn to ETFs for their diversification, lower costs, and liquidity, understanding the offerings and strategies of major players like Vanguard is essential. 
Yet, amidst this expansive array of financial instruments, one notable absence in Vanguard&#8217;s portfolio raises eyebrows: the lack of a <a href="https://www.benzinga.com/topic/bitcoin-etf">Bitcoin ETF. </a>
Here, we delve into the five critical factors about Vanguard ETFs, also explaining why a Bitcoin ETF is deliberately missing from their portfolio lineup.
<h3 class="wp-block-heading">Vanguard&#8217;s Status In The ETF Arena</h3>
Vanguard ranks as the second-largest ETF issuer globally, overseeing a diverse portfolio of over a hundred ETFs and boasting an impressive $2.5 trillion in assets under management (AUM), just shy of BlackRock Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BLK#NYSE">BLK</a>), which leads with $2.7 trillion AUM.
The Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>), with $426 billion in AUM as of Mar. 14, 2024, is not only Vanguard&#8217;s flagship fund but also the world&#8217;s second-largest ETF, trailing slightly behind the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) at $503 billion. 
Top 7 Vanguard&#8217;s ETFs By AUM
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>ETF</th>
<th>AUM (bn)</th>
</tr>
</thead>
<tbody>
<tr>
<td>Vanguard S&amp;P 500 ETF </td>
<td>426.87 </td>
</tr>
<tr>
<td>Vanguard Total Stock Market ETF </td>
<td>385.48 </td>
</tr>
<tr>
<td>Vanguard FTSE Developed Markets ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VEA#NYSE">VEA</a>)</td>
<td>130.07 </td>
</tr>
<tr>
<td>Vanguard Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VUG#NYSE">VUG</a>)</td>
<td>119.81 </td>
</tr>
<tr>
<td>Vanguard Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTV#NYSE">VTV</a>)</td>
<td>115.14</td>
</tr>
<tr>
<td>Vanguard Total Bond Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>)</td>
<td>105.94</td>
</tr>
<tr>
<td>Vanguard Div Appreciation ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VIG#NYSE">VIG</a>) </td>
<td>77.92</td>
</tr>
</tbody>
</table>
</figure>
<h3 class="wp-block-heading">Champion of Low Fees</h3>
In the competitive ETF marketplace, cost efficiency is a significant battleground. Vanguard emerges as a victor here, offering the lowest average expense fees among its funds—an AUM-weighted average expense ratio of a mere 0.05%, according to data from VettaFi. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Issuers</td>
<td>Expense Rank</td>
<td>Avg. Expense Ratio (%)</td>
</tr>
<tr>
<td>Vanguard</td>
<td>1</td>
<td>0.05%</td>
</tr>
<tr>
<td>BNY Mellon</td>
<td>2</td>
<td>0.05%</td>
</tr>
<tr>
<td>Charles Schwab</td>
<td>3</td>
<td>0.08%</td>
</tr>
<tr>
<td>Bondbloxx Investment Management Corp.</td>
<td>4</td>
<td>0.10%</td>
</tr>
<tr>
<td>GAMCO Investors, Inc.</td>
<td>5</td>
<td>0.11%</td>
</tr>
<tr>
<td>Humankind USA LLC</td>
<td>6</td>
<td>0.11%</td>
</tr>
<tr>
<td>State Street</td>
<td>7</td>
<td>0.12%</td>
</tr>
<tr>
<td>Deutsche Bank AG</td>
<td>8</td>
<td>0.13%</td>
</tr>
<tr>
<td>Goldman Sachs</td>
<td>9</td>
<td>0.15%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: VettaFi</figcaption></figure>
The cheapest ETFs issued by Vanguard are the Vanguard S&amp;P 500 ETF, Vanguard Total Stock Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTI#NYSE">VTI</a>), and the Vanguard Total Bond Market ETF, all screening an expense ratio of just 0.03%.
<h3 class="wp-block-heading">Leading The 2024 Inflow Race</h3>
In 2024, Vanguard outshines its competitors in attracting investment flows. The issuer has seen a staggering $75 billion in inflows over the past three months, eclipsing BlackRock&#8217;s $55.7 billion, thereby securing its position as the top performer in fund flows thus far this year.
The Vanguard S&amp;P 500 ETF has attracted $21 billion over the past three months, topping the ranking among its peers. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Issuers</td>
<td>Fund Flow Rank</td>
<td>3-Month Fund Flow ($MM)</td>
</tr>
<tr>
<td>Vanguard</td>
<td>1</td>
<td>$70,097.57</td>
</tr>
<tr>
<td>BlackRock, Inc.</td>
<td>2</td>
<td>$55,791.59</td>
</tr>
<tr>
<td>Invesco</td>
<td>3</td>
<td>$20,380.07</td>
</tr>
<tr>
<td>State Street</td>
<td>4</td>
<td>$16,097.65</td>
</tr>
<tr>
<td>Dimensional</td>
<td>5</td>
<td>$9,362.99</td>
</tr>
<tr>
<td>JPMorgan Chase</td>
<td>6</td>
<td>$9,263.38</td>
</tr>
<tr>
<td>Fidelity</td>
<td>7</td>
<td>$9,240.89</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: VettaFi</figcaption></figure>
<h3 class="wp-block-heading">A Conservative Product Range</h3>
Unlike some of its peers, Vanguard has opted for a more conservative route in its ETF offerings. The company does not offer leveraged ETFs, sticking strictly to equity and fixed-income products. 
This strategic choice highlights Vanguard&#8217;s focus on traditional investment vehicles over speculative or alternative assets. Vanguard&#8217;s portfolio notably lacks any commodities, currency, or Bitcoin-related ETFs.
<h3 class="wp-block-heading">Absence of Bitcoin and Crypto ETFs</h3>
This absence isn&#8217;t due to oversight but a deliberate decision. Vanguard has explicitly stated it has no plans to introduce a Bitcoin ETF or any other crypto-related products, distinguishing itself from other major ETF issuers — such as BlackRock, VanEck, Franklin Templeton, WisdomTree, Invesco, Fidelity, Global X, 21 Shares and ProShares – who have embraced the crypto bandwagon.
Why No Bitcoin ETF? Vanguard&#8217;s Reasoning
Vanguard&#8217;s stance on Bitcoin and cryptocurrencies is grounded in a cautious approach to investment merit and client needs. Janel Jackson, global head of ETF Capital Markets and broker &amp; index relations at Vanguard, has expressed skepticism about the role of cryptocurrencies in long-term portfolios. 
Citing crypto&#8217;s speculative nature, lack of inherent economic value, and potential to disrupt portfolio stability, Vanguard sees crypto as an &#8220;immature asset class.&#8221; 
Instead, the company invests its interest in blockchain technology for its potential to enhance capital market efficiency, steering clear of cryptocurrencies as investment products.
Now Read: <a href="https://www.benzinga.com/markets/cryptocurrency/24/03/37712624/tightening-the-tap-regional-banks-tech-stocks-bitcoin-brace-for-liquidity-crunch-as-fed-li">Tightening The Tap: Regional Banks, Tech Stocks, Bitcoin Brace For Liquidity Crunch As Fed Lifeline Ends</a>

5 Things You Need To Know About Vanguard ETFs: Why There's No Bitcoin ETF In Their Lineup?

As 2023 concludes, the bond market has witnessed a remarkable rally, bolstered by the strength of the<a href="https://www.benzinga.com/news/23/12/36058438/federal-reserve-to-implement-six-rate-cuts-in-2024-amid-economic-slowdown-says-ing"> U.S. economy and a reduction in inflationary pressures.</a>
Despite this, some analysts caution that investor optimism might be overly optimistic for the upcoming year, The Wall Street Journal&nbsp;<a href="https://www.wsj.com/finance/investing/five-investors-on-how-to-navigate-the-bond-market-in-2024-d6e802d2?mod=hp_lead_pos3">reports</a>.
What Happened: This past year, the bond market&#39;s journey has been marked by significant volatility. The 10-year U.S. Treasury note yield, a key market indicator, has dramatically fluctuated.
Initially driven to highs not seen in over a decade by concerns over persistent high interest rates, these yields have since retreated due to various factors, including banking sector stresses and shifts in Federal Reserve policies, WSJ reports.&nbsp;
From its peak of over 5% in October, the highest in 16 years, the yield has retreated by a full percentage point, easing fears about its impact on broader economic factors such as mortgage and corporate loan rates.
There&#39;s a growing belief among economists and market participants in a &#39;soft landing&#39; scenario, where inflation recedes without triggering major economic downturns like increased unemployment or a recession.
However, the bond market is not without its challenges. Issues such as the expanding fiscal deficit, the impending need to refinance low-rated corporate debt, and the final phases of the Fed&#39;s anti-inflationary measures loom large.
Insights provided&nbsp;to the Journal&nbsp;by&nbsp;five seasoned investors reveal diverse perspectives on the future of inflation and the likelihood of a recession.
Also Read:&nbsp;<a href="https://www.benzinga.com/news/23/12/36058725/from-bearish-to-bullish-major-analysts-predict-us-stock-markets-performance-in-2024">From Bearish To Bullish: Major Analysts Predict US Stock Market&#39;s Performance In 2024</a>
George Bory, the chief investment strategist for fixed income at Allspring Global Investments, told WSJ that the risks to the macroeconomy hinge on the market&rsquo;s most significant assumption: inflation&nbsp;will fall smoothly and orderly toward the Fed&rsquo;s 2% target.
&ldquo;Our base case is inflation does come down, but not as orderly as the market thinks,&rdquo; Bory said. &ldquo;Ultimately getting to 2% will be challenging for the Fed without a notable slowdown in growth.&rdquo;&nbsp;
James St. Aubin, the chief investment officer at Sierra Mutual Funds, expresses concerns about the combined effects of higher interest rates and stricter lending standards potentially leading the economy into a recession.
He warns of the potential for a sudden economic downturn: &quot;Everyone always sees a soft landing just before a recession. Then something happens. Things slow down abruptly.&quot;
On a more optimistic note, Rick Rieder, BlackRock&nbsp;chief investment officer of global fixed income, is enthusiastic about the prospects for 2024. He sees significant bond opportunities, favoring investment-grade bonds and European corporate debt. &quot;This is an environment where you can clip 6.5% to 7% without taking that risk,&quot; Rieder told the Journal.
Frances Donald, global chief economist at Manulife Investment Management, suggests that the market might be underestimating the chances of a recession or inflation dropping below the Fed&#39;s target. She advocates for investing in bonds despite potential economic headwinds.
Torsten Slok, chief economist at Apollo Global Management, emphasizes the importance of considering the bond supply and government fiscal policies. He believes the market will pay more attention to Treasury auctions than ever before, telling WSJ, &quot;The market needs to take the bond supply more seriously.&quot;
For investors seeking opportunities in the bond market, here are three ETFs to consider:
<ol>
<li>
iShares Core U.S. Aggregate Bond ETF (ARCA:AGG): Offers diverse exposure to U.S. investment-grade bonds, including government and corporate bonds. Ideal for stable, core bond investments.
</li>
<li>
Vanguard Total Bond Market ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NASDAQ">BND</a>): Provides comprehensive access to the U.S. bond market, covering government, corporate, and municipal bonds. Suitable for broad market exposure.
</li>
<li>
SPDR Bloomberg Barclays High Yield Bond ETF (ARCA:JNK): Focuses on high-yield bonds with higher risk and return potential. Good for investors seeking greater income potential.
</li>
</ol>
Each ETF caters to different risk profiles and investment strategies, making them interesting options for diversifying an investment portfolio in the bond sector.
Now Read:&nbsp;<a href="https://www.benzinga.com/news/23/12/36061721/wall-street-braces-for-2024-recession-economic-growth-to-slow-markets-to-rise-say-bullish-firms">Wall Street Braces For 2024 Recession: Economic Growth To Slow, Markets To Rise, Say Bullish Firms</a>
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: Shutterstock

Investor Optimism Tested: Navigating 2024 Bond Market's Uncertain Terrain

The traditional 60/40 investment portfolio has recorded a remarkable year of growth in 2023, sharply rebounding from a disappointing year in 2022. As of Dec. 27, the year-to-date performance of the 60/40 portfolio, benchmarked by the iShares Core Growth Allocation ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AOR#NYSE">AOR</a>), <a href="https://www.benzinga.com/money/what-is-the-60-40-investment-strategy">stands at approximately 13%. </a>
This performance figure ranks as the third-best year for the strategy since its inception in 2008, trailing only behind the strong years of 2009 and 2019.
As we enter the new year, investors are pondering whether the favorable conditions that supported both equities and bonds in the second half of the year will endure.
<h2 class="wp-block-heading">60/40 Portfolio In 2022-2023: From Downturn to Upswing</h2>
The 60/40 portfolio is a time-tested investment strategy known for its simplicity and effectiveness. It involves allocating 60% of the portfolio to stocks and 40% to bonds, with the aim to strike a balance between risk and reward.
Stocks offer the potential for higher returns but come with higher risk, while bonds generally provide lower but more stable returns. By combining both asset classes, the portfolio naturally diversifies, potentially reducing the risk of significant losses since stocks and bonds often react differently to market conditions.
In 2022, the traditional 60/40 portfolio faced one of its most challenging years due to the Fed&#8217;s aggressive interest rate hikes, which created strong headwinds for both equities and fixed-income assets.
The gauge fell as much as 17%, wiping out a sizable portion of the pandemic rally. 
An initial $1,000 investment in a 60/40 portfolio at the beginning of 2022 dipped to less than $800 by November of that year, only to rebound to its current value of $928.
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="650" height="650" src="https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1.jpeg" alt="" class="wp-image-170022" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1.jpeg 650w,https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1-300x300.jpeg 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1-150x150.jpeg 150w" sizes="(max-width: 650px) 100vw, 650px" /></figure>
However, as inflation subsided in 2023, traders began to anticipate a normalization of elevated interest rates, betting on the Federal Reserve reducing borrowing costs in 2024. 
Money markets currently factor in six rate cuts by 25 basis points next year, a figure substantially higher than the indications given by Federal Reserve officials at the latest meeting, with the dot-plot showing a median preference for 75-basis-point cuts. 
Read also: <a href="https://www.benzinga.com/23/08/33967223/why-the-6040-portfolio-rule-is-not-for-everyone-the-statistics-might-surprise-you">Why The 60/40 Portfolio Rule Is NOT For Everyone – The Statistics Might Surprise You</a>
<h2 class="wp-block-heading">Will the 60/40 Portfolio Continue to Rally in 2024?</h2>
Looking ahead to 2024, it remains to be seen whether the numerous rate cuts currently priced in by the market will be delivered by the Federal Reserve. 
If these rate cuts materialize, bond yields are likely to continue heading lower, benefiting fixed-income assets and potentially rate-sensitive stocks such as those in the technology, real estate, and financial sectors.
On the other hand, if the decline in inflation stalls or fresh pressures emerge, the Federal Reserve may find it inappropriate to deliver as many rate cuts as currently expected by market participants. 
This could lead to disappointment in the markets and potentially weigh on both equities and bonds.
In summary, the 60/40 portfolio has made a strong comeback in 2023, but its performance in 2024 will depend on whether the anticipated rate cuts materialize and how economic factors evolve.
<h2 class="wp-block-heading">5 Strategies to Create a 60/40 Portfolio</h2>
Aside from the iShares Core Growth Allocation ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AOR#NYSE">AOR</a>), there are several other ways for investors to construct a 60/40 portfolio. 
Here are seven different approaches an investor can use to replicate a 60/40 portfolio, with each pairing a stock ETF with a bond ETF:
<ol>
<li>S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and iShares 20+ Year Treasury Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NYSE">TLT</a>): Combining SPY, which tracks the S&amp;P 500 Index, with TLT, focusing on long-term U.S. Treasury bonds, offers a balanced portfolio with exposure to the U.S. stock market and the stability of government bonds.</li>
<li>Vanguard Total World Stock ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VT#NYSE">VT</a>) and iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>): VT provides global stock market exposure, while AGG tracks the U.S. Aggregate Bond Index, diversifying bond exposure.</li>
<li>iShares MSCI ACWI ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ACWI#NYSE">ACWI</a>) and Vanguard Total International Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NYSE">BNDX</a>): ACWI offers global equity exposure, and BNDX focuses on non-U.S. bonds, providing international diversification.</li>
<li>iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>) and Vanguard Total Bond Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>): Similar to SPY, IVV tracks the S&amp;P 500, and BND provides diversified exposure to the U.S. bond market.</li>
<li>Vanguard Total Stock Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTI#NYSE">VTI</a>) and Vanguard Total World Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BNDW#NYSE">BNDW</a>): VTI offers exposure to the entire U.S. stock market, and BNDW provides a globally diversified bond exposure.</li>
</ol>
Read now: <a href="https://www.benzinga.com/economics/macro-economic-events/23/12/36403950/treasury-etf-and-real-estate-sector-rise-together-as-30-year-yields-dip-below-4">Treasury ETF And Real Estate Sector Rise Together As 30-Year Yields Dip Below 4%</a>
Photo: Shutterstock

Large Cap

Treasuries

Tech

ACWI

BNDW

BNDX

60/40 Portfolio Bounces Back From 2022 Slump: Is It The Right Investment Strategy For 2024?

New research from Goldman Sachs reveals that U.S. Exchange-Traded Funds (ETFs) have surpassed the threshold of $8 trillion in assets under management (AUM), setting an <a href="https://www.benzinga.com/etfs">all-time high this week</a>. 
This milestone is another clear indicator of the robust health of the investment landscape in the United States, as major stock market indices trade at or near their record levels. 
The S&amp;P 500, for instance, has rallied by 25% year to date, trading at a mere 1% distance from its all-time highs. Tech stocks in the Nasdaq 100 have soared 53% year to date, hitting a <a href="https://www.benzinga.com/news/large-cap/23/12/36305091/nasdaq-100-hits-record-high-set-for-best-annual-performance-since-1999-tech-boom">record high on Tuesday.</a>
But the increase in the ETF market size isn't just about a bullish stock market. Rising assets among U.S. ETFs have also been driven by the influx of fresh capital from investors, as a testament of a broader optimistic sentiment.
Statistics from ETFdb.com shows that the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), the largest ETF globally, saw an impressive $30.8 billion of inflows in December, raising its AUM to $478 billion. Similarly, another ETF tracking the S&amp;P 500, the Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>), witnessed $5.5 billion of inflows this month. The Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) also saw inflows, amounting to $4 billion.
Investors have shown a keen interest in bond-related ETFs as well. For instance, the iShares 20 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) has witnessed $3.6 billion of inflows so far this month, underlining the diversity of investor interest in both equity and bond markets, as the Federal Reserve&#8217;s stance shifts. 
Here are the top 10 U.S. ETFs with over $100 billion in assets:
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<th>ETF Name</th>
<th>Asset Class</th>
<th>Total Assets ($MM)</th>
<th>YTD Price Change</th>
<th>Avg. Daily Share Volume (3mo)</th>
<th>Previous Closing Price</th>
</tr>
<tr>
<td>SPDR S&amp;P 500 ETF Trust </td>
<td>Equity</td>
<td>$459,320</td>
<td>25.29%</td>
<td>83,028,508</td>
<td>$471.97</td>
</tr>
<tr>
<td>iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>)</td>
<td>Equity</td>
<td>$396,818</td>
<td>25.41%</td>
<td>5,025,149</td>
<td>$476.15</td>
</tr>
<tr>
<td>Vanguard S&amp;P 500 ETF</td>
<td>Equity</td>
<td>$370,019</td>
<td>25.44%</td>
<td>4,786,040</td>
<td>$435.54</td>
</tr>
<tr>
<td>Vanguard Total Stock Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTT#NYSE">VTT</a>)</td>
<td>Equity</td>
<td>$344,291</td>
<td>25.04%</td>
<td>3,440,999</td>
<td>$236.33</td>
</tr>
<tr>
<td>Invesco QQQ Trust Series I (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>)</td>
<td>Equity</td>
<td>$226,720</td>
<td>53.54%</td>
<td>50,701,398</td>
<td>$407.08</td>
</tr>
<tr>
<td>Vanguard FTSE Developed Markets ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VEA#NYSE">VEA</a>)</td>
<td>Equity</td>
<td>$120,812</td>
<td>14.85%</td>
<td>11,897,938</td>
<td>$46.65</td>
</tr>
<tr>
<td>Vanguard Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTV#NYSE">VTV</a>)</td>
<td>Equity</td>
<td>$106,321</td>
<td>8.14%</td>
<td>2,694,169</td>
<td>$148.94</td>
</tr>
<tr>
<td>Vanguard Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTG#NYSE">VTG</a>)</td>
<td>Equity</td>
<td>$105,540</td>
<td>46.26%</td>
<td>924,069</td>
<td>$310.27</td>
</tr>
<tr>
<td>iShares Core MSCI EAFE ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IEFA#NYSE">IEFA</a>)</td>
<td>Equity</td>
<td>$104,985</td>
<td>15.03%</td>
<td>8,991,273</td>
<td>$69.57</td>
</tr>
<tr>
<td>Vanguard Total Bond Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>)</td>
<td>Bond</td>
<td>$103,544</td>
<td>4.92%</td>
<td>7,811,976</td>
<td>$73.25</td>
</tr>
</tbody>
</table>
</figure>
Now read: <a href="https://www.benzinga.com/news/earnings/23/12/36300632/nasdaq-s-p-500-futures-bounce-higher-as-santa-claus-rally-awaits-analyst-says-december-typically-se">Nasdaq, S&amp;P 500 Futures Bounce Higher As Santa Claus Rally Awaits: Analyst Says December Typically &#8216;Second-Half Story&#8217;</a>
Photo: Shutterstock

Econ #s

IEFA

Rydex ETF Trust Rydex S&P Equal Weight ETF

US ETFs Surpass $8 Trillion In Assets: Top 10 Funds Holding Over $100B Each

In recent weeks, several bond exchange-traded funds (ETFs) have experienced a significant surge in inflows, indicating a <a href="https://www.benzinga.com/money/best-bond-etf">heightened interest among investors. </a>
This shift coincided with a market that significantly upped bets on Federal Reserve rate cuts for 2024, backed by a robust and ongoing <a href="https://www.benzinga.com/topic/inflation">disinflationary trend</a> in the U.S. economy. 
Speculators have gone as far as factoring in an initial rate cut as early as March 2024, with whispers of a total of five rate cuts by December 2024.
But which bond ETFs are currently piquing investors&#8217; interest?
<h2 class="wp-block-heading">From &#8216;Cash-Like&#8217; to &#8216;Equity-Like&#8217;</h2>
While the third quarter in 2023 witnessed a notable uptick in inflows into cash-linked bond ETFs, primarily those investing in short-dated Treasury bonds and bills, the latest trends are veering towards more aggressive fixed-income strategies.
Investors are strategically positioning themselves in anticipation of an imminent U-turn in Fed&#8217;s monetary policy stance, eyeing a select group of bond ETFs that have weathered the storm during the recent spate of interest rate hikes.
Their bullish stance on riskier bond ETFs underscores a burgeoning belief that the bond market landscape could undergo a substantial recalibration in the coming months, as they brace for a more accommodating monetary policy environment.
These ETFs encompass a diverse range, including long-term Treasury bonds, emerging-market bonds, and high-yield corporate bonds. 
<h2 class="wp-block-heading">Top 10 Bond ETFs by Fund Inflows in the Past Month</h2>
<figure class="wp-block-table"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Fund Flows (1-month)</th>
</tr>
</thead>
<tbody>
<tr>
<td>iShares Trust &#8211; iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>)</td>
<td>$3.69 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>)</td>
<td>$2.62 bn</td>
</tr>
<tr>
<td>SPDR Series Trust &#8211; SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>)</td>
<td>$1.99 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; 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>$1.89 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>)</td>
<td>$1.62 bn</td>
</tr>
<tr>
<td>Vanguard Bond Index Funds &#8211; Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>)</td>
<td>$1.56 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Broad USD High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USHY#NYSE">USHY</a>)</td>
<td>$1.31 bn</td>
</tr>
<tr>
<td>Vanguard Scottsdale Funds &#8211; Vanguard Long-Term Treasury ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGLT#NASDAQ">VGLT</a>)</td>
<td>$665.99 bn</td>
</tr>
<tr>
<td>Vanguard Charlotte Funds &#8211; Vanguard Total International Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>)</td>
<td>$641.06 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 5-10 Year Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IGIB#NYSE">IGIB</a>)</td>
<td>$216.67 bn</td>
</tr>
</tbody>
</table>
</figure>
Read Now: <a href="https://www.benzinga.com/etfs/specialty-etfs/23/12/36075348/golds-record-high-why-havent-gold-miners-followed-suit">Gold&#8217;s Record High: Why Haven&#8217;t Gold Miners Followed Suit?</a>
Photo: Shutterstock

Emerging Markets

New ETFs

Emerging Market ETFs

Federal Reserve

iShares JPMorgan USD Emerging Markets Bond Fund

IGIB

USHY

VGLT

Investors Pour Billions To Aggressive Bond ETFs, Banking On Multiple Fed Rate Cuts in 2024

Investors have accumulated record amounts of cash and equivalent assets as a way to hedge against the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/10/35150923/why-this-cboe-global-markets-analyst-is-bullish-at-time-of-geopolitical-turmoil">volatility of recent times.</a>
Now, fund managers are urging investors to put that money to work, as decreasing inflation and the potential for an economic slowdown may lead to profitable opportunities in the bond markets.
<a href="https://www.ici.org/research/stats/mmf">According</a> to ICI Global, capital invested into money market fund assets reached a record of $5.73 trillion last week. Money market funds are characterized by having very low volatility and very high liquidity, holding large amounts of cash and other low-risk securities in their portfolios.
Investors tend to lean towards money market investing in times of uncertainty, when availability of cash is a prime concern and tolerance to risk is low. Money market funds give better returns than cash deposits on banks, which is why investors have been flocking towards these assets since the Fed began its tightening cycle last year, which has now taken the federal funds rate to between 5.25% and 5.50%.
But, with <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35783516/october-inflation-drop-triggers-markets-rally-economists-reassess-after-surprising-">inflation dropping to more comfortable levels</a>, bond managers are suggesting that now is an optimal time to allocate some of those assets into the bond market.
Minutes from the Federal Open Market Committee&#8217;s November meeting revealed that Fed participants view the current interest rate level of between 5.25% and 5.5% as restrictive, potentially signaling the end of their intensive rate hike campaign in light of recent positive inflation data and acknowledging the significant tightening of financial <a href="https://www.benzinga.com/economics/macro-economic-events/23/11/35903926/november-fomc-minutes-fed-leans-toward-rate-stability-as-inflation-eases">conditions in recent months.</a>
Also Read: <a href="https://www.benzinga.com/news/23/11/35905071/musk-and-the-magnificent-9-how-worlds-10-richest-people-bagged-400b-in-2023">Musk And The Magnificent 9: How World&#8217;s 10 Richest People Bagged $400B In 2023</a>
Greg Whiteley, head of Government Securities Investing at DoubleLine <a href="https://www.bloomberg.com/news/articles/2023-11-21/bond-managers-of-2-5-trillion-make-case-for-leaving-cash-behind?srnd=premium&amp;sref=TBDibEcD">told</a> Bloomberg that the range of 4.5% to 5% yield "is a safe place to be buying bonds."
The two-year treasury bond currently yields at 4.89% while the 5- and 10-year bonds have a yield of 4.44%.
Whiteley and other fund managers contend that the Federal Reserve&#8217;s actions are effectively slowing down the economy, a necessary step to reduce inflation back to the 2% target. Economist Gary Shilling <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35867664/legendary-economist-foresees-30-drop-in-stocks-predicts-recession-and-feds-credibil">this week predicted that a recession is imminent</a>, potentially including a 30% drop in stock values, which further supports the strategy of redirecting investments towards safer and comparatively higher-yielding assets such as bonds.
Piper Sandler strategist Michael Kantrowitz echoed the same prediction over the weekend, based on several data points coming<a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35866823/top-wall-street-strategist-expresses-worries-about-looming-recession-we-are-at-the-"> from housing, profits, and employment.</a> 
The housing market showed a slight uptick last week but<a href="https://www.benzinga.com/news/23/11/35836886/housing-market-shows-a-slight-uptick-but-remains-slow-ahead-of-beazer-homes-earnings-call"> continues at historically low levels</a>, with mortgage rates sustaining prices that are unaffordable for the majority of homebuyers.
Other economists, however, lean towards a soft-landing scenario, which would mean a return to pre-pandemic<a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35820947/us-economy-gearing-towards-soft-landing-amid-inflation-concerns-says-economists"> inflation levels without a recession</a>.
Bond fund managers argue that sticking to cash "means you miss all the potential price appreciation if the economy starts to slow," as Ryan Murphy of Capital Group told Bloomberg.
The managers also pointed to <a href="https://www.benzinga.com/money/what-are-mortgage-backed-securities">mortgage bonds</a> as a sector that could lift off next year if interest rates come down. Mortgage-backed securities consist of pools of mortgages that lenders bundle together and sell as securities to third parties in order to free up more cash to continue lending.
While these securities gained a bad reputation for their role in the 2008 financial crash, increased regulation has made them appealing again. Although they still carry more risk than cash or government bonds, they're generally considered less risky than corporate bonds, because there&#8217;s real estate as collateral, and they carry less volatility than stocks.
These include Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) and iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) for the broad ranging bond market, and iShares MBS ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NASDAQ">MBB</a>) as well as Vanguard Mortgage-Backed Securities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NASDAQ">VMBS</a>) for specific exposure to mortgage-backed securities.
Now Read: <a href="https://www.benzinga.com/fintech/23/11/35904576/sam-altman-in-discussions-about-openai-return-as-employees-revolt-and-msft-picks-up-the-pieces">Sam Altman In Discussions About OpenAI Return As Employees Revolt, Microsoft Picks Up The Pieces</a>
Image by Shutterstock.

Real Estate

VMBS

Ready For Recession? Fund Managers Advocate Shift To Treasury, Mortgage Bonds

Market participants are eagerly awaiting for the March personal consumption expenditure (PCE) price index report from the Bureau of Economic Analysis on Friday (April 28),&nbsp;<a href="https://www.benzinga.com/premarket-prep/" target="_blank">before the market opens</a>.&nbsp;
With the next FOMC meeting in less than a week, what is regarded as the Fed&#39;s preferred gauge of inflation will be considered a key signal for assessing&nbsp;<a href="https://www.benzinga.com/news/23/04/31957119/the-next-big-short-hedge-funds-place-record-bearish-bets-on-us-10-year-treasuries" target="_blank">market expectations about the Fed&#39;s impending policy moves.</a>
What To Know:&nbsp;The PCE price index grew 5% year on year in February 2023, down from 5.3% in January, and 0.3% month on month, down from 0.6% in January.&nbsp;
<ul>
<li>The Core PCE price index, which measures inflation over a wide range of consumer expenditures excluding energy and food and is of particular relevance to the Fed, increased 4.6% annually and 0.3% monthly in February. The annual figure was marginally above expectations (4.5%), while the monthly one matched estimates.&nbsp;</li>
<li>The market consensus&nbsp;is for the March core PCE price index to rise 0.3% month on month and 4.5% year on year.&nbsp;</li>
<li><a href="https://www.benzinga.com/economics/macro-economic-events/23/04/32045033/us-gdp-growth-falls-short-of-expectations-in-q1-markets-react-to-potential-fed-po" target="_blank">The Bureau of Economic Analysis&#39; initial GDP estimate&nbsp;in the first quarter&nbsp;of 2023&nbsp;</a>delivered surprises in terms of both real growth and the price deflator. While real GDP growth was lower than projected (1.1% vs. 2.2%), the price index for gross domestic purchases&nbsp;accelerated&nbsp;in the&nbsp;quarter (3.8% compared to 3.6% prior&nbsp;and a consensus of 3.7%).&nbsp;</li>
<li>The BEA also announced PCE prices grew at a 4.2% quarter-on-quarter annualized rate in the first quarter of&nbsp;2023 after gaining 3.7% in the fourth quarter of&nbsp;2022. The core PCE price index climbed 4.9% in the first quarter of&nbsp;2023 after rising 4.4%. Both figures were higher than market expectations of 0.5% and 3.7%, respectively.</li>
<li>In March, the U.S. consumer price index (CPI) inflation was 5% year-on-year, down from the 6% posted in February and below expectations of 5.2%. Core CPI inflation, instead, ticked up from 5.5% to 5.6% year-on-year.&nbsp;</li>
</ul>
The following are predicted to be some of the most volatile ETFs in response to the March PCE figures:
<ul>
<li>SPDR S&amp;P 500 ETF Trust (ARCA: SPY)</li>
<li>Invesco QQQ Trust Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>)</li>
<li>SPDR Dow Jones Industrial Average ETF Trust&nbsp;(ARCA: DIA)</li>
<li>iShares 20 Plus&nbsp;Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>)</li>
<li><a href="https://www.benzinga.com/money/vanguard-review/">Vanguard</a> Total Bond Market Index Fund ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NASDAQ">BND</a>)</li>
<li>SPDR Gold Trust (ARCA: GLD)</li>
<li>Invesco DB USD Index Bullish Fund ETF (ARCA: UUP)</li>
</ul>
Why It Is Important For Markets: March Core PCE inflation will almost certainly remain substantially over the Fed&#39;s 2% inflation target.
Markets will be paying close attention to how far the March Core PCE figure deviates from consensus predictions.&nbsp;
A core PCE print&nbsp;of less than 0.3% monthly or 4.5% annually will likely reinforce current market assumptions that the Fed&#39;s rate hike cycle will come to an end in May. This will be a relief for the markets, even though a lot of the Fed&#39;s expected shift in policy may have already been priced in.
A core PCE reading greater than 0.3% monthly or 4.5% yearly will generate considerably more uncertainty on the rate front, possibly sparking some speculation on another Fed hike&nbsp;in June, and so creating additional headwinds for interest-rate sensitive assets such as tech and growth equities as well as bonds, while likely favoring the U.S. dollar.&nbsp;
Markets have nearly fully priced in a 25-basis-point rate hike in May to 5%-5.25%, however, estimates for the June meeting are more open with a 66% chance that rates would remain unchanged in the aforesaid range and a 24% chance of another hike, according to CME Group Fedwatch tool.&nbsp;
Read Also:&nbsp;<a href="https://www.benzinga.com/trading-ideas/long-ideas/23/04/32044850/top-5-industrials-stocks-that-could-lead-to-your-biggest-gains-in-april" target="_blank">Top 5 Industrials Stocks That Could Lead To Your Biggest Gains In April</a>
Photo: Shutterstock
<ul>
</ul>
<ul>
</ul>
&nbsp;

March PCE Price Index Preview: Here's Why Fed's Favorite Inflation Gauge Is A Key Market-Moving Event Before FOMC

A good ETF strategy will depend on your investment goals, risk tolerance, and time horizon. However, here are a few general principles to keep in mind when developing an ETF strategy:
Index-based strategy: This strategy involves investing in ETFs that track a specific index, such as the S&amp;P 500 or the Nasdaq 100. The advantage of this strategy is that it provides broad market exposure with low expense ratios. By investing in index-based ETFs, you can gain exposure to the overall performance of the stock market, without having to select individual stocks. Index-based ETFs are typically designed to provide a diversified portfolio of stocks that represent a particular market or industry sector.
<ul>
<li>SPDR S&amp;P 500 ETF Trust (ARCA: SPY): This ETF tracks the S&amp;P 500 index, which is a benchmark of 500 large-cap US stocks. Year-to-date, the ETF has had a return of around 9% (as of April 2023).</li>
<li>iShares Russell 2000 ETF (ARCA: IWM): This ETF tracks the Russell 2000 index, which is a benchmark of 2,000 small-cap US stocks. Year-to-date, the ETF has had a return of around 11% (as of April 2023).</li>
</ul>
Sector-based strategy: This strategy involves investing in ETFs that track a specific sector, such as technology, healthcare, or energy. This can be a good way to gain targeted exposure to specific industries. Sector-based ETFs allow investors to invest in specific areas of the market that they believe will perform well in the future. This can be a good way to diversify your portfolio and potentially increase your returns. However, sector-based ETFs can be riskier than index-based ETFs because they are concentrated in a specific sector.
<ul>
<li>Technology Select Sector SPDR Fund (ARCA: XLK): This ETF tracks the technology sector of the S&amp;P 500 index, which includes companies such as Apple, Microsoft, and Facebook. Year-to-date, the ETF has had a return of around 8% (as of April 2023).</li>
<li>Health Care Select Sector SPDR Fund (ARCA: XLV)): This ETF tracks the healthcare sector of the S&amp;P 500 index, which includes companies such as Johnson &amp; Johnson and Pfizer. Year-to-date, the ETF has had a return of around 10% (as of April 2023).</li>
</ul>
Dividend-based strategy: This strategy involves investing in ETFs that focus on high dividend-paying stocks. This can be a good way to generate regular income from your investments. Dividend-based ETFs provide exposure to stocks that have a history of paying high dividends to their shareholders. These stocks are typically well-established, financially stable companies with a long history of consistent dividends. Dividend-based ETFs can provide investors with a source of steady income, which can be particularly useful in retirement.
<ul>
<li>iShares Select Dividend ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/dvy#NASDAQ">DVY</a>): This ETF tracks the performance of US stocks that have a history of consistently paying high dividends. Year-to-date, the ETF has had a return of around 12% (as of April 2023).</li>
<li>SPDR S&amp;P Dividend ETF (ARCA: SDY): This ETF tracks the performance of US stocks that have a history of consistently paying dividends. Year-to-date, the ETF has had a return of around 11% (as of April 2023).</li>
</ul>
International strategy: This strategy involves investing in ETFs that provide exposure to international markets, such as emerging markets or developed markets outside of the US. This can be a good way to diversify your portfolio globally. International ETFs allow investors to invest in markets outside of the US. This can provide diversification benefits and potentially higher returns, as foreign markets can sometimes outperform US markets. However, investing in international markets can also expose investors to currency risk and political risk.
<ul>
<li>iShares MSCI EAFE ETF (ARCA: EFA): This ETF tracks the performance of developed market stocks outside of North America, including companies in Europe, Asia, and Australia. Year-to-date, the ETF has had a return of around 8% (as of April 2023).</li>
<li>iShares MSCI Emerging Markets ETF (ARCA: EEM): This ETF tracks the performance of emerging market stocks, including companies in China, India, and Brazil. Year-to-date, the ETF has had a return of around 3% (as of April 2023).</li>
</ul>
Bond-based strategy: This strategy involves investing in ETFs that track a specific bond market, such as US Treasury bonds or corporate bonds. This can be a good way to generate fixed income with low risk. Bond-based ETFs invest in a portfolio of bonds, which provide a fixed rate of return to investors. This can be particularly useful for investors who are looking for a low-risk investment that provides a regular stream of income. Bond-based ETFs can also help to diversify a portfolio, as they are typically less volatile than stocks.
<ul>
<li>iShares Core US Aggregate Bond ETF (ARCA: AGG): This ETF tracks the performance of the US investment-grade bond market. Year-to-date, the ETF has had a return of around 2% (as of April 2023).</li>
<li>Vanguard Total Bond Market ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NASDAQ">BND</a>): This ETF tracks the performance of the US investment-grade bond market. Year-to-date, the ETF has had a return of around 1% (as of April 2023).</li>
</ul>

iShares Dow Jones Select Dividend Index Fund

Investment Strategies For Exchange Traded Funds (ETFs) & Funds You Should Consider

Net short bets <a href="https://www.benzinga.com/news/23/03/31519408/long-term-treasuries-suffer-worst-day-in-2023-as-markets-rethink-fed-policy-path">against U.S. treasuries have</a> reportedly risen to the highest level in last one year in the week ending last Tuesday.
What Happened: According to the latest report from the Commodity Futures Trading Commission, net-short leveraged fund positions in 10-year futures rose by almost 150,000 contracts in the week to last Tuesday, marking the biggest bearish shift since March 2022, <a href="https://www.bloomberg.com/news/articles/2023-04-10/hedge-funds-rushed-to-short-treasuries-in-time-for-payrolls-beat">reported</a> Bloomberg.
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Fast-money funds appear to be temporarily entering into bets against longer-dated bonds after taking hits during the recent banking crisis volatility when they took positions expecting a sell-off in shorter maturities, the report said.
On Friday, treasury yields rose after U.S. labor data increased expectations <a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31672653/federal-reserves-loretta-mester-expects-likelihood-of-more-rate-hikes-heres-why">that the Federal Reserve</a> will hike rates in May by 25 basis points. The Labor Department reported the U.S. economy added 236,000 jobs in March, just shy of economist <a href="https://www.benzinga.com/news/23/04/31714148/s-p-500-volatility-continues-as-investors-digest-latest-labor-market-data">estimates of 240,000 new jobs</a>.
Rate Path: Traders are currently betting the central bank will hike rates again in May as the U.S. economy is indicating resilience despite the crisis in the banking sector, the report said. The CME FedWatch Tool shows 66% probability of a 25 bps rate hike in the next policy.
The 10-year note yielded 3.37% during Monday morning Asian trade, up from Friday's low of 3.25%. The ProShares Ultra 20+ Year Treasury (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UBT#NYSE">UBT</a>) gained over 6.5% in last five days while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) rose over 1% during the period.
Expert Take: Goldman Sachs Group analysts, including Praveen Korapaty, wrote in a note that although U.S. yields bounced following the jobs report, they remain below levels from the prior week, leaving room for more upward repricing, according to the Bloomberg report.
"The mix of March data thus far should solidify the case for a hike at the upcoming May FOMC meeting," they wrote.
ANZ Research said in a note that the Fed's update to its inflation forecast in March looks underdone. "The Fed has consistently underestimated inflation in recent times. There is no reason to think it hasn't done so again, especially if financial conditions settle down quickly following the collapse of a few U.S. banks," it said.
Read Next: <a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31721115/currency-carry-trades-regain-popularity-as-global-rates-seemingly-hit-their-peaks">Currency Carry Trades Regain Popularity As Global Rates Seemingly Hit Their Peaks: Here&#8217;s What It Means</a>

Net Bearish Bets Against US Treasuries Rose To 1-Year Highs: Fed Rate Hike On Cards?

Pimco Multi-Asset Strategies Portfolio Manager Erin Browne reportedly said that rates and equities are singing from different hymn books currently. 
What Happened: Browne said that while the former is pricing-in accelerated rate cuts during second half of this year and into 2024, <a href="https://www.benzinga.com/news/23/04/31672113/tesla-c3-ai-johnson-amp-johnson-cardlytics-bullfrog-ai-holdings-why-these-5-stocks-are-drawing-inves">equities are priced for rich valuations.</a> Browne <a href="https://twitter.com/BloombergTV/status/1643253247459598339?cxt=HHwWhoCxremHgc4tAAAA">told</a> Bloomberg TV this indicates the rates market is starting to price-in the economy and is heading towards a recession.
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"Equities, however, still are priced for very rich valuations, continued growth and expansion this year and even more so in 2024, and are really not focused on the fact that we are heading into a recession. So, I don&#8217;t think both markets can be right at the same time. Either we are not heading into a recession and rates need to reprice higher or we are and equities are really primed for too much growth and are going to have to re-rate lower," Browne explained.
Why It Matters: U.S. equity markets have registered gains since the beginning of the year while treasury yields have cooled down. 
For example, the S&amp;P 500 has gained over 7% since the beginning of the year. Meanwhile, yield on two-year Treasury notes have cooled about 50 basis points in the same period.
If yields are coming off, it indicates the market's expects <a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31672653/federal-reserves-loretta-mester-expects-likelihood-of-more-rate-hikes-heres-why">the Federal Reserve may</a> cut interest rates at some point in time during the year — a scenario that factors-in the possibility of a recession. In contrast, the equity markets reflect higher valuations, indicating recession possibilities are not being factored-in.
The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) gained 7.31% in 2023 while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) gained 2.82%.
Banking Woes: Browne said she doesn't think the banking woes may be over yet. 
"I don&#8217;t think it&#8217;s in a rear view mirror. Certainly the immediacy of the sort of heightened period of fear is behind us. But I do think we&#8217;re going to have more drips of this as we move through the rest of this year," she said.
Read Next:<a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31672837/gold-eyes-record-high-on-safe-haven-status-weak-dollar-hopes-of-softening-fed-pet"> Gold Eyes Record High On Safe-Haven Status, Weak Dollar, Hopes Of Softening Fed: Peter Schiff Sees &#8216;Spectacular&#8217; Rally</a>

Pimco's Erin Browne Says Rates, Equities 'Singing From Different Hymn Books' — Thinks Both Can't Be Right

As The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, announced a reduction in oil production by 1.16 million barrels per day beginning May, the impact was visible not just in oil prices but other assets too, <a href="https://www.benzinga.com/news/23/04/31625115/tesla-meta-wwe-mcdonalds-ford-why-these-5-stocks-are-drawing-investors-attention-today">when trading commenced in Asia on Monday.</a>
What Happened: The decision certainly comes as a new headache <a href="https://www.benzinga.com/news/23/03/31607473/feds-preferred-inflation-measure-comes-in-cooler-than-expected-as-banking-crisis-complicates-powells">for the Federal Reserve</a>, which appeared to be facing a tough time over the last few weeks, fighting inflation and trying to contain the banking crisis at the same time. 
With oil prices rising, the central bank will now have to figure out how much of an impact will this have on the future path of inflation.
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As the West Texas Intermediate (WTI) futures expiring in May and Brent futures expiring in June <a href="https://www.benzinga.com/news/23/04/31625206/oil-prices-surge-over-5-in-asia-trade-following-surprise-opec-production-cut-these-etfs-could-draw-i">soared over 5% during Monday morning Asian trade</a>, U.S. Treasury notes, the dollar and index futures began reflecting the impact of the surprise move by the organization. 
Here's a look at how some of these assets commenced the week:
1. Dollar: The dollar traded higher as inflation concerns once again took precedence following the OPEC+ move. Investors and traders are weighing in the possibility that the <a href="https://www.benzinga.com/economics/macro-economic-events/23/03/31611929/five-economists-react-to-core-pce-numbers-what-will-the-fed-do-next">Federal Reserve may need to hike</a> interest rates at its next meeting. The dollar index, which measures the strength of the greenback against a basket of six currencies, was last trading at 0.48% higher, at 102.99, having breached the 103 level earlier during the day. It will be worth watching how the Invesco DB US Dollar Index Bullish Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UUP#NYSE">UUP</a>) performs in the coming days.
2. Treasury Yields: Yield on treasuries also climbed following expectations of <a href="https://www.benzinga.com/government/23/03/31533829/banking-system-is-sound-say-officials-in-the-face-of-a-flurry-of-questions-from-senate-banking-commi">rate hike by the Federal Reserve.</a> The two-year treasury yield, which usually moves in line with interest rate expectations, rose 5 basis points to 4.11% at the time of writing. The yield on 10-year treasury notes was up 2.9 basis points at 3.519%. The Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) had closed 0.52% higher on Friday.
3. Index Futures: U.S. index futures, too, took a hit following the news. The Nasdaq 100 futures were trading 0.64% lower while the S&amp;P 500 futures lost 0.32% in morning trade. The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and the Invesco QQQ Trust Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) are expected to witness volatility this week following last week's positive momentum.

Futures

Commodities

Forex

PowerShares DB US Dollar Index Bullish Fund

OPEC+ Decision On Oil Production Cuts Just Roiled These Already Volatile Assets: What's Going On?

Morgan Stanley&nbsp;Chief U.S. Equity Strategist and&nbsp;<a target="_blank" href="https://www.benzinga.com/news/earnings/23/02/30992889/market-rally-or-speculative-frenzy-why-morgan-stanley-says-payback-is-coming-s-p-500-could-crash-to" rel="noreferrer noopener">CIO&nbsp;Mike Wilson&nbsp;reportedly said</a>&nbsp;the bond market is effectively pricing some sort of a recession at this point, while the equity market is still in denial.
"When the yield curve goes negative, it has high predictability that a recession will be coming within twelve months. But 12 months is a long time. The real trouble starts when the yield curve re-steepens. Because that&#8217;s essentially the bond market saying the Fed&#8217;s going to have to be cutting here at some point," Wilson&nbsp;<a target="_blank" href="https://twitter.com/BloombergTV/status/1637913140854759428" rel="noreferrer noopener">told</a>&nbsp;Bloomberg TV.
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Price Action:&nbsp;Yield on two-year treasury notes fell from over 5% levels seen in early March to as low as 3.8% last week in the backdrop of the banking crisis in the U.S. as the&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/03/31383630/regulator-knew-days-before-svb-collapse-that-620-billion-in-losses-lurked-in-financial-system" rel="noreferrer noopener">shuttering down of the&nbsp;Silicon Valley Bank</a>&nbsp;led investors to rush into the safety of short-term treasuries. The yield on the notes has risen back to 3.96% at the time of writing.
"The yield curve has bull steepened by 60 bps in a matter of days, something seen only a few times in history and usually the bond market's way of saying recession risk is now more elevated," Morgan Stanley analysts led by Wilson wrote in a note.
Markets witnessed significant bouts of volatility over the last two weeks following the unfolding of the crisis which many feared would end up in contagion. However, following&nbsp;UBS Group AG's&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UBS#NYSE">UBS</a>) rescue deal announcement of&nbsp;Credit Suisse Group AG&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CS#NYSE">CS</a>), as well as the coordinated action by central banks around the world to boost liquidity, major Wall Street indices witnessed some bit of relief.
The&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed 0.96% higher and the&nbsp;Invesco QQQ Trust Series 1&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) gained 0.35%. The&nbsp;Vanguard Total Bond Market Index Fund ETF&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) closed 0.43% lower.
Market participants are now eyeing the&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/03/31431191/presidential-candidate-vivek-ramaswamy-blasts-fed-ahead-of-rate-decision-disastrous-25-year-experime" rel="noreferrer noopener">Federal Reserve's&nbsp;two-day policy meeting</a>&nbsp;that starts on Tuesday. The&nbsp;CME FedWatch Tool&nbsp;shows over 73% probability of a 25 bps rate hike during this policy compared to over 26% chance of status quo.
Read Next:&nbsp;<a target="_blank" href="https://www.benzinga.com/government/23/03/31430996/us-officials-reportedly-looking-at-ways-to-expand-fdic-cover-to-all-deposits-elon-musk-says-absolute" rel="noreferrer noopener">US Officials Reportedly Looking At Ways To Expand FDIC Cover To All Deposits — Elon Musk Says &#8216;Absolutely Required&#8217;</a>

Morgan Stanley Strategist Says Bond Market Pricing Some Sort Of Recession But Equity Market Still In Denial

Market forecaster Jim Bianco, <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/02/31021656/market-forecaster-jim-bianco-calls-fomc-minutes-hyped-for-stock-market-cash-is-no-l">president and Macro Strategist at Bianco Research</a>, pointed out that the S&amp;P 500's movement over the last week has shown a lot of reversals.
What Happened: Bianco's comments came in the backdrop of a positive day for the markets. On Thursday, major Wall Street indices closed in the green. The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed 0.78% while the Invesco QQQ Trust Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) gained 0.83%.
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"The S&amp;P has reversed nine times in the last seven trading days. Today&#8217;s rally is less than 50% of the previous two days," Bianco tweeted, adding that investors should not over-read into the intra-day moves too much.
"The real question is how long until the 10th reversal?" Bianco said.
The S&amp;P 500 has moved in the range between 4,018 and 3,928 over the last seven trading sessions. Bianco cited a tweet by an analyst that questioned the positive move of the index on a day when treasury yields were shooting higher.
The 10-year Treasury yield breached the 4% mark this week for the first time since November, led by fears of <a href="https://www.benzinga.com/news/23/03/31186693/thinking-of-buying-a-house-30-year-mortgage-rates-rise-over-7-again">persistent rate hikes and lingering inflation</a>. The iShares 20 Plus Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) closed 0.89% lower on Thursday while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) lost 0.21%.
Why It Matters: What needs to be seen is whether the small gain made on Thursday is another dead cat bounce or will the market find a support at a time when <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/03/31186251/el-erian-says-fed-risks-tipping-economy-into-recession-every-time-it-falls-behind">Federal Reserve officials</a> are continuing to sound hawkish ahead of the central bank's policy meet this month. Rising treasury yields, in current times, have not been too positive for the market.
Options expiring on March 10 indicate the S&amp;P 500 index is seeing a strong resistance at the 4,000 level as is indicated by the open interest build-up on the out-of-the-money Call strikes. The index is has a strong support at the 3,950 level, options data show. S&amp;P 500 closed at 3,981.35 on Thursday.
Read Next: <a href="https://www.benzinga.com/news/23/03/31187492/harvards-jason-furman-backs-50-bps-rate-hike-in-march-fed-should-stick-with-reaction-function-it-set">Harvard&#8217;s Jason Furman Backs 50 Bps Rate Hike In March: Fed Should &#8216;Stick With Reaction Function It Set Out&#8217;</a>

Market Forecaster Jim Bianco Says S&amp;P 500 Reversed 9 Times In Last 7 Trading Days: A Look At Crucial Levels

Harvard Professor Jason Furman believes the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/03/31186251/el-erian-says-fed-risks-tipping-economy-into-recession-every-time-it-falls-behind">Federal Reserve is</a> in danger of falling behind the curve again which may increase the cost of reining in inflation.
"The Fed doesn&#8217;t need to change course at its March meeting — it should stick with the reaction function it set out. Which, in light of recent data, would be consistent with raising rates by 50bp," Furman tweeted.
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The Professor cited his <a href="https://www.wsj.com/articles/fed-tightening-should-go-faster-and-further-50-basis-points-rates-march-meeting-january-data-powell-e576d845">opinion </a>piece in The Wall Street Journal in which he argues that the central bank should shift from a 25-basis points hike to a 50-bps increase at its next meeting in March.
Furman pointed out in his tweets that just about every measure of inflation measured over the last three months has risen since the last FOMC meeting and coupled with that there has been strong economic data regarding consumption, jobs growth, hours growth, earnings growth, core orders growth, etc.
"If you revised up your view of underlying inflation by 0.25-50 pp plus revised up your views on the strength of the labor market and the economy&#8217;s resilience to rate hikes that would be consistent with raising the terminal rate to about 6 percent," Furman tweeted.
Increasing Risks: The Professor pointed out that it will be tempting to use the statement, the dots, among other things to avoid what would look like an overly rapid lurch but said that would be a mistake. "The Fed has said it was data dependent, it is hard to imagine a bigger shift in data," Furman said.
On Thursday, major Wall Street indices closed in the green on Thursday after Treasury yields dropped from earlier highs following comments from a Federal Reserve official. The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed 0.78% higher on Thursday while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) lost 0.21%.
"A year ago it was obvious the Fed was behind the curve. The Fed caught up with the curve. It is in danger of falling behind again, something that risks greatly increasing the <a href="https://www.benzinga.com/news/23/03/31153375/jim-cramer-says-inflation-needs-to-cool-in-these-areas-before-expecting-relief-from-rate-hikes">cost of bringing inflation down</a>," Furman said in his tweet.
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Harvard's Jason Furman Backs 50 Bps Rate Hike In March: Fed Should 'Stick With Reaction Function It Set Out'

As fears of sticky inflation and persistent rate hikes continue to impact markets, the average rate on the 30-year fixed mortgage reportedly breached the 7% mark on Thursday.
Rates had jumped over the 7% mark last October, hitting the highest level in over 20 years, <a href="https://www.cnbc.com/2023/03/02/mortgage-rates-back-over-7percent.html">according </a>to a CNBC report. 
However, they fell in the <a href="https://www.benzinga.com/news/23/03/31153375/jim-cramer-says-inflation-needs-to-cool-in-these-areas-before-expecting-relief-from-rate-hikes">following months as inflation seemed</a> to be cooling. By mid-January, rates were hovering close to 6%, leading to a spike in buyers signing contracts on existing homes, the report said.
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"Rates continue to move at the suggestion of economic data, and the data hasn't been friendly. This is scary considering this week's data is insignificant compared to several upcoming reports," said Matthew Graham, chief operating officer at Mortgage News Daily.
Rising Yield: The 10-year Treasury yield breached the 4% mark this week for the first time since November led by fears of persistent rate hikes and lingering inflation. 
The iShares 20 Plus Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) closed 0.89% lower on Thursday while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) lost 0.21%.
Mortgage applications from homebuyers have been declining for the past month and hit a 28-year low last week, the CNBC report stated citing the Mortgage Bankers Association. This is because today's monthly payment is about 50% higher compared with a year ago when rates were in the 4% range.
George Ratiu, senior economist at Realtor.com said consumers have taken on a record amount of debt. "With rising interest rates, financial burdens are expected to increase, making consumer choices more difficult in the months ahead," he said according to the CNBC report.
Read Next: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/03/31186251/el-erian-says-fed-risks-tipping-economy-into-recession-every-time-it-falls-behind">El-Erian Says Fed Risks Tipping Economy Into Recession Every Time It Falls Behind</a>

Thinking Of Buying A House? 30-Year Mortgage Rates Rise Over 7% Again

Allianz chief economic adviser and noted economist <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/02/31082985/el-erian-says-congress-should-enhance-feds-accountability-require-it-to-follow-bank">Mohamed El-Erian reportedly said</a> every time the central bank falls behind, the risk of the central bank pushing the economy into recession goes up.
"The minute you go to the 10-year (Treasury yield), you know you are bringing in a whole set of other issues including growth. And the concern that&#8217;s in the market, and we have seen how inverted the curve remains, is that we may end up having the Fed tip us into recession," El-Erian <a href="https://twitter.com/CNBC/status/1631316939661352960?cxt=HHwWgIC9iaKHzaMtAAAA">told </a>CNBC.
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On Thursday, major Wall Street indices closed in the green on Thursday after Treasury yields dropped from earlier highs following comments from a Federal Reserve official. Atlanta Federal Reserve President Raphael Bostic argued for quarter-point hikes and said he preferred a "slow and steady" course of action for the central bank, according to a Reuters report. The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed 0.78% on Thursday while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) lost 0.21%.
Rising Yields: El-Erian's comments come in the backdrop of the 10-year Treasury yield breaching the 4% mark for the first time since November led by <a href="https://www.benzinga.com/news/23/03/31153375/jim-cramer-says-inflation-needs-to-cool-in-these-areas-before-expecting-relief-from-rate-hikes">fears of persistent rate hikes and lingering inflation</a>. The yield was last trading close to 4.056% at the time of writing.
"That&#8217;s totally unnecessary. Every time the Fed falls behind, and this is the third time it has fallen behind in two years, the probability of the Fed tipping the economy into recession goes up. So, that&#8217;s what you are seeing in terms of the yield curve &#8211; the 10-year vs the 2-year," El-Erian said.
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Analyst Color

El-Erian Says Fed Risks Tipping Economy Into Recession Every Time It Falls Behind

Nobel laureate and noted economist Paul Krugman&nbsp;questioned the prevalent belief that bringing down inflation required a recession, while stating that America&rsquo;s handling of the pandemic shock under President Joe Biden will be mostly <a href="https://www.benzinga.com/news/22/09/28908733/president-biden-in-60-minutes-interview-said-covid-pandemic-is-over">remembered as a success story.</a>
&ldquo;But won&#39;t bringing inflation down require a nasty recession? Maybe, or maybe not &mdash; that&#39;s an assertion, not a fact. And the standard economic model of stagflation, which depends on expectations, actually says not, since expected inflation hasn&#39;t risen much,&rdquo; he said in a series of tweets, it was reported in October 2022.
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&ldquo;In short, there&#39;s a pretty good probability that we&#39;ll look back on how America handled the pandemic shock, mostly under Biden, and see it as a big success story,&rdquo; he said at the time.
Wage Growth: He asserted his views by comparing the wage growth from pre-pandemic levels. Krugman stated that the real wages of non-supervisory workers are actually higher compared to pre-pandemic levels. The overall real wages are down mostly because of food and energy, he argued.
&ldquo;So real wages of nonsupervisory workers actually higher than pre-pandemic; real wages overall slightly down, but that&#39;s entirely bc of food and energy, driven by forces outside the US. Not the story you&#39;ve probably heard,&rdquo; he tweeted in October.
<blockquote class="twitter-tweet">So we&#39;ve returned to full employment, but with unacceptably high inflation. And inflation is bad because it reduces real wages &mdash; right? Actually, the facts if you compare the current situation with pre pandemic, are kind of surprising 1/ <a href="https://t.co/srO3is9rPq">pic.twitter.com/srO3is9rPq</a>
&mdash; Paul Krugman (@paulkrugman) <a href="https://twitter.com/paulkrugman/status/1586812475713937411?ref_src=twsrc%5Etfw">October 30, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>The U.S. Federal Reserve was set to announce its monetary policy at the time and market participants had already started factoring in a relatively less aggressive central bank. The SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>) closed 2.38% higher on Oct. 28, 2022,&nbsp;while the Vanguard Total Bond Market Index Fund ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NASDAQ">BND</a>) closed 0.2% lower.
Contrarian View: Experts like former Treasury Secretary Lawrence H. Summers had been <a href="https://www.benzinga.com/government/22/10/29451920/larry-summers-says-consensus-view-that-inflation-will-come-way-down-is-outside-range-of-normal-histo">projecting a contrarian view</a>, saying soft landings from high inflation without a recession is not something that has happened earlier.&nbsp;
This story was originally published on Oct. 30, 2022.
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When Paul Krugman Gave A Verdict On US Handling Of Pandemic Shock, Inflation Under Biden: 'Pretty Good Possibility That...'

Charlie Bilello, Chief Market Strategist at CPI Wealth, pointed out that the famed 60/40 portfolio comprised of <a href="https://www.benzinga.com/news/earnings/23/02/31044058/us-stocks-stare-at-more-losses-in-a-lackluster-week-can-inflation-data-salvage-years-rally">U.S. stocks and bonds</a> is currently at a 14-month drawdown.
"A 60/40 Portfolio of U.S. stocks/bonds is currently in a 14-month drawdown, 14% below its all-time high," Bilello tweeted.
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The standard portfolio where an investor puts 60% of their investible sum into equities and 40% in bonds is generally considered a prudent diversification. However, in the current economic environment, the portfolio doesn't seem to be working.
Equity markets have been volatile this year as strong economic data, higher-than-expected inflation and a tight labor market ate into the gains made during January. Federal Reserve officials have been increasingly warning that more needs to be done to reach their 2% target. These factors have also led to rising bond yields.
Price Action: <a href="https://www.benzinga.com/news/23/02/30980534/1-year-treasury-bill-or-s-p-500-charlie-bilello-asks-which-would-generate-better-returns-and-gets-an">Bilello pointed out</a> that the 2-year Treasury yield moved up to 4.78% &#8212; its highest level since July 2007. "A year ago this yield was at 1.54% and two years ago it was at 0.12%," he said.
On a year-to-date basis, the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) has gained 4.09% while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) has lost 0.4%.
Bilello also pointed out that the drawdown in the portfolio also stands out when compared over the last decade.
"This is the longest drawdown <a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29693038/dr-doom-nouriel-roubini-recalls-his-warning-about-classic-60-40-investment-1">for a 60/40 portfolio</a> since the financial crisis (37 months) and before that the aftermath of the dot-com bubble (43 months)," he tweeted.
Read Next: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/02/31063423/will-fed-chicken-out-or-hang-tough-if-higher-rates-cause-crisis-asks-peter-schiff-a">Will Fed &#8216;Chicken Out&#8217; Or &#8216;Hang Tough&#8217; If Higher Rates Cause Crisis, Asks Peter Schiff: A Majority Say&#8230;</a>

Famed 60/40 Stocks-Bonds Portfolio At 14-Month Drawdown, Says Market Strategist: Longest Since Financial Crisis'

Euro Pacific Capital&nbsp;Chief Economist&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/02/30973889/peter-schiff-the-fed-is-not-winning-but-everybody-else-is-losing-sectors-and-investment-ideas-to-wat" rel="noreferrer noopener">Peter Schiff</a>&nbsp;conducted a poll on&nbsp;Twitter,&nbsp;asking what the&nbsp;Federal Reserve&nbsp;would do if inflation remains well above the 2% target but higher interest rates cause another financial crisis.
"Will the Fed chicken out and pivot, sending the inflation rate to new highs, or will it hang tough and let the crisis play out naturally," Schiff asked in a poll he conducted on Twitter.
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Interestingly, 64.7% of participants voted that the Fed would &#8220;chicken out&#8221; which will cause price rises to continue and hit new highs. Only 35.3% of participants believe the central bank would hang tough.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">What will the <a href="https://twitter.com/hashtag/Fed?src=hash&amp;ref_src=twsrc%5Etfw">#Fed</a> do if higher interest rates causes another financial crisis, but <a href="https://twitter.com/hashtag/inflation?src=hash&amp;ref_src=twsrc%5Etfw">#inflation</a> remains well above the 2% target? Will the Fed chicken out and pivot, sending the inflation rate to new highs, or will it hang tough and let the crisis play out naturally.
&mdash; Peter Schiff (@PeterSchiff) <a href="https://twitter.com/PeterSchiff/status/1629617844567564289?ref_src=twsrc%5Etfw">February 25, 2023</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
Economic data this month, however, have not been too encouraging. Tight labor market conditions and higher-than-expected inflation in December caused the markets to take a break from their January rally.
Price Action:&nbsp;Major Wall Street indices closed over 1% lower on Friday as the core&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/02/31046854/feds-preferred-inflation-measure-bounces-in-january-what-you-need-to-know" rel="noreferrer noopener">personal consumption expenditures&nbsp;price index</a>, the Fed's preferred measure of inflation, rose 0.6% in January and 4.7% from the prior year, above a Wall Street estimate of 4.3%.&nbsp;
The&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) fell 1.07% on Friday, while the&nbsp;Vanguard Total Bond Market Index Fund ETF&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) lost 0.55%.
Fed officials have been increasingly sounding out the need to for more rate hikes. Last week,&nbsp;New York Federal Reserve&nbsp;Bank President&nbsp;John Williams&nbsp;said the central bank is committed to guiding inflation down to its 2% target while&nbsp;St. Louis Federal Reserve&nbsp;President&nbsp;James Bullard&nbsp;stated a relatively aggressive interest rate hike now would give the&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/02/31021321/feds-williams-bullard-make-it-clear-central-bank-means-business-lets-be-sharp-now" rel="noreferrer noopener">FOMC a better chance to rein in inflation</a>.
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