“Early indications hint of an uninspiring pace of first-quarter 2019’s real consumer spending,” according to Moody’s. “For example, January 2019’s unit sales of cars and light trucks in the U.S. fell by 5.1% from December 2018’s pace on a seasonally adjusted basis to 16.6 million annualized units. January’s monthly drop was the deepest since the 8.1% plunge of May 2011, while January’s seasonally adjusted annualized sales pace was the lowest since the 16.4 million units of August 2017.”
Fortunately for junk bonds and the corresponding ETFs, expectations are low that the Fed will raise interest rates this year.
“In summary, the flatness of early 2019’s business activity preserves the possibility of yet lower Treasury bond yields. It’s for good reason that the futures market assigns merely a 5% likelihood to fed funds ending 2019 above their current 2.375% midpoint,” notes Moody’s.
For more information on the fixed-income market, visit our bond ETFs category.