Furthermore, the prevailing notion in the capital markets is that Federal Reserve Chair Jerome Powell and the FOMC are set to raise interest rates two more times through 2018.
Investment-Grade Fixed Income ETFs Rise
In addition to rising government debt yields, Dimon also made mention of business sentiment residing at its highest levels in addition to consumer sentiment.
“Business sentiment is almost at the highest level it’s ever been, consumer sentiment is at its highest levels, markets are wide open, housing’s in short supply and my guess is mortgage credit will expand a little bit,” Dimon told CNBC in June. “If you look at how the table’s set, consumers are in very good shape.”
If Dimon’s comments corroborate with the fixed-income ETFs focusing on corporate bonds, then investors should take advantage of the opportunities, particularly in ETFs with investment-grade debt issues like the iShares Intermediate Credit Bond ETF (NASDAQ: CIU) and iShares iBoxx $ Invmt Grade Corp Bd ETF (NYSEArca: LQD. Both ETFs were up today–0.16% and 0.14%, respectively.
CIU seeks to track the investment results of the Bloomberg Barclays U.S. Intermediate Credit Bond Index. The ETF’s focus is on investment-grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds that are U.S. dollar-denominated and have a remaining maturity of greater than one year and less than or equal to ten years.
LQD seeks to track the investment results of the Markit iBoxx® USD Liquid Investment Grade Index composed of U.S. dollar-denominated, investment-grade corporate bonds. LQD allocates 95 percent of its total assets in investment-grade corporate bonds to mitigate credit risk during times of a recession.
For more trends in fixed income, visit the Fixed Income Channel.