ETF Trends | ETF Trends

U.S. companies announced nearly 90,000 layoffs in March, up 15% from the 78,000 announced in February and up 319% from the more than 21,000 cuts announced in the same month in 2022, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas.

March’s total marks the third time this year that cuts were higher than the corresponding month a year earlier.

While inflation has come down dramatically since its peak of 9% last year, the Fed still has a long way to go before consumer prices come down to the U.S. central bank’s target of 2%. This will likely entail higher unemployment and tighter credit and financial conditions.

“With rate hikes continuing and companies’ reigning in costs, the large-scale layoffs we are seeing will likely continue,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas.

All of this, in turn, will likely lead to a modest recession in the U.S. later this year, according to Vanguard. So, fixed income has become more appealing to investors now that interest rates are higher than they’ve been in years.

“Because yields are higher today than at any time since the 2008 global financial crisis, bonds now have better expected returns and can cushion against further price declines,” wrote Vanguard’s head of active fixed income product management John Croke and head of index fixed income product management Samuel Martinez.

See more: “Consider a Defensive Approach to Fixed Income

Vanguard has an array of fixed income ETFs with different durations, including the Vanguard Short-Term Bond ETF (BSV), the Vanguard Intermediate-Term Bond ETF (BIV), and the Vanguard Long-Term Bond Index Fund ETF Shares (BLV).

BSV invests in U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds with a dollar-weighted average maturity of one to five years.

BIV offers exposure to investment-grade U.S. debt with maturities between five and ten years, putting it in between short-term funds such as BSV and longer-dated products such as BLV. The fund’s holdings include Treasuries, corporate debt, and agency securities, avoiding high-risk junk bonds or floating-rate debt.

BLV seeks to track the performance of the Bloomberg U.S. Long Government/Credit Float Adjusted Index, which includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds that have maturities of greater than 10 years and are publicly issued. As such, BLV can draw from a variety of options when it comes to bond investments.

For more news, information, and analysis, visit the Fixed Income Channel.