In its latest official meeting, the Federal Reserve said it expected faster economic growth and lower unemployment next year as the economy strengthens and Congress likely to implement tax cuts for businesses and families. Consequently, given the healthier economic outlook, the Fed could step out with higher interest rates ahead.
“At the moment, the U.S. economy is performing well,” Fed Chair Janet L. Yellen said during her final Fed news conference earlier in December. “There’s less to lose sleep about now than has been true for quite some time.”
With the economy chugging along and the Fed likely to hike rates ahead, investors should think about rate-hedged bond ETFs, like IGHG and HYHG, for a diversified fixed-income portfolio.
For more information on the fixed-income market, visit our bond ETFs category.