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☆ This asset can provide investors hefty yields at a favorable tax rate. Here’s what you should know
▼ + stars: | 2024-06-27 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

Preferred stocks can offer investors plenty of attractive income – and do so at a favorable tax rate – but they should proceed with caution before adding them to their portfolio. Preferred stocks are hybrid assets, combining attributes of bonds and equities, and their issuers include banks and utilities . He said these securities make up no more than 15% of his clients' fixed income allocation. Preferred investors would be paid before the stockholders, but they are well behind the bondholders in terms of priority. There is also the iShares Preferred and Income Securities ETF (PFF) , which has a 30-day SEC yield of 6.33%.

Persons: preferreds, Ken Waltzer, Frank Sileo, Collin Martin, Tapping, Wells Organizations: Wealth, UBS Financial Services, Americas, UBS, Poor's, Schwab Center, Financial Research, Trust Preferred Securities, SEC, Holdings, Barclays, Securities ETF, Citigroup, NextEra Locations: Los Angeles, Wells Fargo, Albemarle

☆ Federal Reserve says all 31 banks in annual stress test withstood a severe hypothetical downturn
▼ + stars: | 2024-06-26 | by ( Hugh Son | ) www.cnbc.com time to read: +3 min

The Federal Reserve said Wednesday that the biggest banks operating in the U.S. would be able to withstand a severe recession scenario while maintaining their ability to lend to consumers and corporations. The stress test assumed that unemployment surges to 10%, commercial real estate values plunge 40%, and housing prices fall 36%. "This is good news and underscores the usefulness of the extra capital that banks have built in recent years." The Fed's stress test is an annual ritual that forces banks to maintain adequate cushions for bad loans and dictates the size of share repurchases and dividends. "While banks are well positioned to withstand the specific hypothetical recession we tested them against, the stress test also confirmed that there are some areas to watch," Barr said.

Persons: Michael Barr, JPMorgan Chase, Goldman Sachs, Barr, Banks Organizations: Financial, Valley Bank, Signature Bank, Capitol, Washington , D.C, Federal Reserve, JPMorgan, American Express Locations: Washington ,, U.S

☆ Here’s how Wall Street is playing fixed income in the second half of the year
▼ + stars: | 2024-06-24 | by ( Michelle Fox | ) www.cnbc.com time to read: +4 min

Fixed-income investors may want to consider making a few tweaks to their portfolio as the second half of the year gets underway. But the central bank is expected to start cutting rates in the coming months, perhaps as soon as September. However, many on Wall Street still believe two cuts are likely this year, including Charles Schwab. Jones anticipates better returns for fixed income in the second half but believes volatility will remain high. Investors can have a barbell portfolio with Treasurys on one end and investment-grade bonds and an agency MBS on the other, she suggested.

Persons: Charles Schwab, Kathy Jones, Jones, Sameer Samana Organizations: Federal Reserve, Fed, nab, MBS, JPMorgan, Treasury, Wells, Wells Fargo Investment Institute Locations: Wells Fargo, Samana, munis

☆ If you’re grabbing tax-free income from this asset, you may be sacrificing yield
▼ + stars: | 2024-06-21 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +5 min

Though municipal bonds generally offer income that's free of federal income taxes – and state taxes if the investor resides in the issuing state – they also come with lower yields compared to other bonds. When it comes to muni bonds, the higher your tax bracket, the more valuable the tax-free income is. A tax-conscious approach to fixed income You don't have to bulk up on municipal bonds to get the best yield for your tax scenario. Municipal bonds are good contenders in taxable brokerage accounts, where investors can benefit from their tax-free income. Some fund families offer "tax-aware strategies" either in mutual funds or ETFs, which can include some exposure to municipal bonds, as well as equities.

Persons: Wells Fargo, aren't, Nisha Patel, That's, Collin Martin, Michael Carbone, it's, Beth Foos Organizations: Wells, Wells Fargo Investment Institute, Federal Reserve, SEC, Bond, Corporate Bond, York Life Investments, Schwab Center, Financial Research, Morningstar Locations: Wells Fargo, Chelmsford , Massachusetts

☆ These are the most popular trades today — and the best contrarian trades to go against the crowd
▼ + stars: | 2024-06-18 | by ( Sarah Min | ) www.cnbc.com time to read: +1 min

By far, the most dominant trade on Wall Street is going long the "Magnificent Seven." Investors are the most bullish they've been on the mega-cap tech stocks going back to October 2020, the firm found. In fact, about 69% of respondents were bullish on the group, making the Magnificent Seven the most crowded trade for 15 straight months. One highly contrarian trade Bank of America identified could be going long bonds. Going long oil is another contrarian trade that could work as an hedge against geopolitical risk, the Wall Street firm said.

Persons: they've, What's, BofA Organizations: Bank of America Securities, Bank of America

☆ These new high yield bond funds are hitting the market as interest rates start to fall
▼ + stars: | 2024-06-18 | by ( Jesse Pound | In Jesse-Pound | ) www.cnbc.com time to read: +4 min

The managers for the fund also helm the BlackRock High Yield mutual fund, which has a four-star rating from Morningstar and a yield of roughly 6.5%. Other recent launches include the John Hancock High Yield ETF (JHHY) , an Invesco BulletShares 2032 High Yield Corp. ETF (BSJW) , and the AB Short Duration High Yield ETF (SYFI) , which was a conversion from a mutual fund. The new products come as the next steps for high yield debt are unclear. High yield investors say that the sector is still on solid ground, at least for now. Four of the five biggest broad-based high yield bond ETFs have seen inflows over the past month, according to FactSet.

Persons: Jay Jacobs, John Hancock, Michael Schlembach, Schlembach, AJ Rivers, Rivers Organizations: Morningstar, BlackRock, John, Yield Corp, Treasury, Federal Reserve, Marathon Asset Management Locations: BlackRock, U.S

☆ Bank of Japan set to reduce JGB purchases, stands pat on interest rate
▼ + stars: | 2024-06-14 | by ( Lim Hui Jie | ) www.cnbc.com time to read: +1 min

The Bank of Japan is largely expected to hold interest rates steady at the end of its 2-day meeting ending June 14, 2024. The Bank of Japan kept its benchmark interest rate unchanged on Friday, but indicated it's considering the reduction of its purchase of Japanese government bonds. The central bank left short-term rates unchanged at between 0% to 0.1% at the end of its two-day policy meeting, as widely expected. But notably, the bank said in its statement it could reduce its purchases of Japanese government bonds after the next monetary policy meeting, scheduled for July 30 and 31. Purchases of JGBs, commercial paper and corporate bonds will also continue as decided in the March monetary policy meeting.

Persons: Nakamura Toyoaki, Toyoaki, JGB Organizations: Bank of Japan, The Bank of Japan, U.S ., Nikkei Locations: Tokyo

☆ This sector is loved by Wall Street for its attractive yields and relative value
▼ + stars: | 2024-06-14 | by ( Michelle Fox | ) www.cnbc.com time to read: +4 min

High interest rates have been a boon to Americans holding cash, but many on Wall Street are cautioning investors to start thinking ahead. People have been piling into cash vehicles like money market funds and certificates of deposit since the Federal Reserve started hiking interest rates. Interest rates appear to be staying higher for longer, with the Federal Reserve on Wednesday projecting only one rate cut this year. Agency MBS have a duration of about six years, per the Bloomberg US MBS Index as of June 3, Jones noted. Right now, the residential mortgage-backed securities sector looks attractive because of its relative value compared to investment-grade corporate bonds, he said.

Persons: Jones, Leslie Falconio, Fannie Mae, Freddie Mac, Ginnie Mae, Wells Fargo, Luis Alvarado, Alvarado, Falconio Organizations: Federal Reserve, Investment Company Institute, Schwab Center, Financial Research, Agency MBS, Bloomberg, MBS, UBS, Wells, Wells Fargo Investment Institute, Investors, corporates, UBS America's, AAA Locations: UBS Americas, Wells, Wells Fargo

☆ With yields around 7%, fallen angel ETFs have outperformed — but come with risks
▼ + stars: | 2024-06-06 | by ( Michelle Fox | ) www.cnbc.com time to read: +5 min

Just two exchange-traded funds invest in the space — iShares Fallen Angels USD Bond ETF (FALN) and VanEck Fallen Angel High Yield Bond ETF (ANGL). FALN 1Y mountain iShares Fallen Angels USD Bond ETF one-year performance The iShares Fallen Angels USD Bond ETF and VanEck Fallen Angel High Yield Bond ETF track two different indexes. ANGL seeks to replicate the ICE US Fallen Angel High Yield 10% Constrained Index, while FALN tracks the Bloomberg Barclays U.S. High Yield Fallen Angel 3% Capped Index. In comparison, the Bloomberg U.S. High Yield Index has a 4.64% annualized return over the past 10 years, the firm said. Be aware of risks Fallen angel portfolios are generally much higher quality than their high-yield peers, said Morningstar's Evens.

Persons: —, Zachary Evens, Evens, Jared Woodard, Stephen Laipply, Morningstar's, Laipply, FALN Organizations: Angels, Bond, SEC, Morningstar, Chartered Alternative Investment, Association, Bloomberg Barclays, Bank of, Bank of America, U.S, ICE, Bloomberg Barclays U.S ., Bloomberg U.S, Corporate, Broad Locations: Bank, BlackRock

Generating income with dividend stocks Dividend stocks have long been a staple of income investors' portfolios. Municipal bonds offer income that's free of federal tax, however. These names trade on exchanges like stocks, and they can offer dividend yields upward of 6%. Options strategies to create income Derivative income funds , such as the JPMorgan Equity Premium Income ETF (JEPI), gathered some $22 billion in 2023, according to Morningstar. Further, consider comparison shopping, as all "derivative income" funds have their own quirks and differences in strategies could affect their risk/return profile.

Persons: Janus Henderson, Walt Disney's, Amber Milam, Jefferies, It's, Savita Subramanian, Subramanian, Russell, Louis, Morningstar, Mike Mulach, Rick Rieder, he'd, Kathleen McNamara, there's, –, Bill Gross, JEPI, Cash, Ashton Lawrence Organizations: Federal Reserve, Meta, Mobile, Bank of America, IBM, . Investment, Fitch, Credit, nab, ICE, Federal Reserve Bank of St, Louis Fed, UBS, UBS Wealth Management, York Life Investments, –, JPMorgan, Mariner Wealth Advisors Locations: U.S, Greenville , South Carolina

☆ UBS expects a comeback for the 60/40 portfolio — and warns investors to limit cash
▼ + stars: | 2024-05-31 | by ( Michelle Fox | ) www.cnbc.com time to read: +4 min

The 60/40 portfolio isn't dead — in fact, it tends to outperform over the long term, according to UBS. The strategy revolves around a simple balanced portfolio, allocating 60% to stocks and 40% to fixed income. That theory was tested when both equities and fixed income slumped in 2022. Crafting a balanced portfolio Falconio expects the new 60/40 construction to look a little different with the rise in popularity of alternative assets. When it comes to traditional fixed income assets, UBS suggests holding strategic, diversified exposure throughout fixed income.

Persons: Cash, Mark Haefele, Leslie Falconio, Falconio, Fannie Mae, Freddie Mac, Ginnie Mae, Darla Mercado Organizations: UBS, Investment Company Institute, Federal Reserve, U.S . Locations: UBS Americas, —

☆ UBS says it's time to move out of cash. Here's where it sees opportunity
▼ + stars: | 2024-05-21 | by ( Michelle Fox | ) www.cnbc.com time to read: +3 min

The era of hiding out in cash is coming to an end, according to UBS. While investors have been earning yields of more than 5% on instruments like money market funds and certificates of deposit, those rates aren't expected to stick around much longer. "We believe investors should limit their overall cash balances as falling interest rates this year and beyond will diminish returns on cash," Solita Marcelli, chief investment officer Americas for UBS Global Wealth Management, wrote in a note Monday. Investors flooded into money market funds as the Federal Reserve began raising interest rates in 2022. UBS also moved out on the curve on TIPS earlier this month after initially buying 5-year inflation-protected securities in August.

Persons: Marcelli, Leslie Falconio, Falconio Organizations: UBS, UBS Global Wealth Management, Investors, Federal Reserve, Investment Company Institute, AAA, AAA CMBS Locations: UBS Americas

☆ Creating an income-producing portfolio
▼ + stars: | 2024-05-20 | by ( Jeanne Sahadi | ) edition.cnn.com time to read: +7 min

A lot goes into creating and managing an income-producing portfolio that works for you. Knowing your expenses will give you a good sense of the income you’ll need. Ways to generate incomeTake the income you think you’ll need and subtract from that the income you expect. For example, if you need $65,000 a year but will only bring in $40,000, you’ll need to generate the other $25,000. • For money you’ll need in three to five years, use short-term corporate bonds as well as longer-term CDs.

Persons: it’s, Will, David Seufer, you’ll, Marguerita Cheng, ”, David Edmisten, Edmisten, Cheng, ” Seufer, “, ” Edmisten, Seufer, they’re, ” Cheng Organizations: New, New York CNN, Gravitas, Social Security, Blue, ” Capital, Social Locations: New York

☆ Money market funds yielding more than 5% won’t last. Where to deploy idle cash instead
▼ + stars: | 2024-05-09 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +5 min

Money market funds' siren song has become a little louder: With the timing of Federal Reserve rate cuts shaky, yields on cash are still hot – for now. Here's how to decide where and when to redeploy some of your idle cash into fixed income. Taxes are also a key consideration as you build out your fixed income sleeve. Interest income from Treasurys, meanwhile, is subject to federal income tax but exempt from state and local taxes. A gradual entry toward fixed income You don't have to build out your fixed income allocation in one day.

Persons: Rob Williams, Charles Schwab, Ashton Lawrence, Lawrence, Williams Organizations: Mariner Wealth Advisors, Mutual Locations: Greenville , South Carolina, Treasurys, New York , New Jersey, California

☆ These bond funds offering yields upward of 5% could take off as Fed policy becomes uncertain
▼ + stars: | 2024-05-07 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +5 min

That shakiness around when the cuts are coming, as well as the expectation that rates could remain higher for longer creates an opportunity for active managers. Rick Rieder, BlackRock's global chief investment officer of fixed income, told CNBC in a phone interview. Indeed, core bond funds were among the winners in the 2008 crisis. For starters, they should think about the role they want a given bond fund to play within their portfolio: Is it to offset equity risk or to boost returns? "You're not investing in bond funds to shoot the lights out and build your wealth pile," said Morningstar's Jacobson.

Persons: Rick Rieder, Rieder, Eric Jacobson, Morningstar, John Croke ,, Morningstar's Jacobson, Jaime Quinones, they're, Quinones Organizations: Federal Reserve, Barclays, Bank of America, Citigroup, CNBC, Bloomberg, SEC, Morningstar, Vanguard, Stockade Wealth Management, Mutual Locations: Marlboro , N.J

☆ The Fed will spark an economic crash by delaying rate cuts, State Street equity research chief says
▼ + stars: | 2024-05-06 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

Read previewThe economy is bound to enter a downturn if the Federal Reserve delays cutting interest rates, according to Marija Veitmane, the head of equity research at State Street Global Markets. The Wall Street vet warned of an impending economic crash if the Fed doesn't ease monetary policy soon. Higher interest rates are already taking a toll on economic strength, she noted, even if growth numbers looked fine last quarter. But the economy is already showing signs of strain from the burden of elevated interest rates, Veitmane warned. Markets are largely expecting the Fed to keep interest rates level at its next policy meeting.

Persons: —, Marija Veitmane, Veitmane Organizations: Service, Federal, Street Global Markets, Business, CNBC, AAA

☆ DoubleLine’s Jeffrey Gundlach sees one rate cut this year as the Fed keeps up inflation fight
▼ + stars: | 2024-05-01 | by ( Yun Li | ) www.cnbc.com time to read: +1 min

DoubleLine Capital CEO Jeffrey Gundlach said Wednesday that he now sees no more than one interest rate cut this year as the Federal Reserve keeps policy tight to fight stubborn inflation. "The inflation rate clearly is the one that is lacking progress as [Jerome Powell] put it, so I'm going to lean on one rate cut," Gundlach said on CNBC's " Closing Bell." "Higher for longer … seems like the mantra continues, but without a rate hike. Treasury yields dropped to their session lows and stocks shot to session highs as Powell said the next policy move will not be a rate increase. "I think it's unlikely that the next policy rate move will be a hike.

Persons: Jeffrey Gundlach, Jerome Powell, Gundlach, Powell Organizations: DoubleLine, Federal Reserve, Treasury

☆ How to lock in attractive, high-income returns from low-risk bonds in an inverted yield curve, according to a portfolio manager
▼ + stars: | 2024-04-25 | by ( Laila Maidan | ) www.businessinsider.com time to read: +4 min

And that's seen by the dot plot and their own inability to predict when interest rate cuts are going to happen." Related storiesWhen the yield curve is inverted, meaning short-term rates are above longer-term ones, a barbell strategy in bonds means betting on long- and short-duration bonds. And that barbell is kind of what investing in the yield curve looks like today", Huffman said. But if interest rates fall, you will be forced to reinvest in a lower interest rate environment. Avoid the 10-year or 30-year duration bonds because they will face a negative yield curve role, which could reduce their total return potential, she added.

Persons: Taylor Huffman, Huffman, it's Organizations: PT Asset Management, Business, Management's, Bond, Securities

☆ China may have to brace for a new wave of bond defaults, S&P says
▼ + stars: | 2024-04-24 | by ( Evelyn Cheng | ) www.cnbc.com time to read: +1 min

BEIJING — China's state-directed economy may be creating the conditions for a new wave of bond defaults that could come as soon as next year, according to an S&P Global Ratings report released Tuesday. It comes against a backdrop of extremely few defaults in China amid concerns about overall growth in the world's second-largest economy. China's corporate bond default rate fell to 0.2% in 2023, the lowest in at least 8 years and far below the global rate of about 2.6%, S&P data showed. "We've seen directives or guidance from the government in the past year to discourage defaults in the bond market." "The question is: When the guidance to avoid the defaults in the bond market [ends], what happens to the bond market?"

Persons: Charles Chang, that's, Chang, We've Organizations: Country Garden Holdings Co Locations: Phoenix, Heyuan, Guangdong province, China, BEIJING

☆ It’s prime time to lock in yields on this tax-free income play, UBS says
▼ + stars: | 2024-04-23 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

UBS doesn't see the Federal Reserve embarking on rate cuts until September — and that means now is the time to snap up tax-free municipal bonds. Bond yields and prices move inversely, so a decline in rates will come with price appreciation for the underlying issues. "Against that backdrop, we believe that yields on quality municipal bonds look attractive at current levels," wrote UBS Wealth Management senior municipal bond strategist Kathleen McNamara in a report last week. The kicker of tax-free income Muni bonds are generally backed by the full faith and credit of the issuer, which makes them less of a default risk compared with corporates. Large diversified municipal bond funds can be cheap, but state-focused funds tend to be a little more costly.

Persons: Kathleen McNamara, McNamara, FKTFX Organizations: UBS, Federal, UBS Wealth Management, Bond, SEC, Vanguard California, Franklin, Franklin California Tax, Income Fund, Muni Bond ETF, Vanguard New Locations: There's, New York , California, New Jersey, California, Franklin California

☆ Bank of America's top global strategist warns of growing bubble risk in the stock market as the economy heads for a no-landing scenario — and shares 3 charts showing the market could be headed for tro
▼ + stars: | 2024-04-20 | by ( William Edwards | ) www.businessinsider.com time to read: +5 min

Read previewMichael Hartnett, Bank of America's top global strategist, thinks a no-landing scenario is the most-likely outcome for the US economy in the months ahead. That means the labor market would remain strong, but inflation would also stay above the Federal Reserve's long-term goal of 2%. While that's fine for now, Hartnett warns it's a path that eventually leads to trouble for the economy and stocks. "We say rising no landing risks = rising hard landing risks," Hartnett said in an April 11 note. The fund's price dipped below its 200-day moving average in 2020 and 2022, when the economy slowed and stocks underperformed.

Persons: —, Michael Hartnett, Hartnett, it's, Michael Landsberg Organizations: Service, Bank of America's, Business, Consumer, Bank of America, Landsberg Bennett, Wealth Management, Fed Locations: REITs, Ukraine

☆ Here's what to know about adding foreign bond exposure to your portfolio
▼ + stars: | 2024-04-18 | by ( Michelle Fox | ) www.cnbc.com time to read: +5 min

Investors have been raking in income thanks to attractive yields in the U.S. bond market. Investing in global bond funds Individual investors can add exposure to foreign bonds through global bond funds. There are hedged funds, which hedge foreign currency exposure back to the U.S. dollar and therefore reduce currency risk. "It's good to be diversified because foreign bond exposure is a massive part of the global bond markets," Mulach said. Here are Morningstar's top picks for global bond exposure: The Pimco strategies keep the bulk of their non-U.S. currency exposure hedged back to the U.S. dollar.

Persons: Rick Rieder, Rieder, Collin Martin, Martin, It's, Mike Mulach, Mulach, Rick Rieder's, Darla Mercado Organizations: BlackRock, SEC, Investment, U.S ., European, European Central Bank, Federal, Schwab Center, Financial Research, Morningstar, U.S, Strategic Global Bond Fund, Investor, Morningstar . Dodge, Cox's Global Bond Fund Locations: U.S, Europe, BlackRock, Mexico, Brazil

☆ This fixed income play touts yields upward of 6% — and the risk is relatively low, Bank of America says
▼ + stars: | 2024-04-17 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +3 min

The firm began coverage of this corner of the ETF space on Monday. An ETF play Woodard's team began coverage of one CLO fund: the Janus Henderson AAA CLO ETF (JAAA) . "Among covered ETFs with higher credit quality, it has the highest yield," Woodard said. There is also BlackRock's AAA CLO ETF (CLOA) , an actively managed offering with an expense ratio of 0.20% and a 30-day SEC yield of 6.59%. Investors digging into the CLO ETF space shouldn't just focus on yield, of course.

Persons: Jared Woodard, Woodard, Jerome Powell, CLOs, Janus Henderson, JAAA Organizations: Federal Reserve, Bank of America, AAA, Janus Henderson AAA CLO, SEC, AA, AAA CLO, CLOs, BBB

☆ There are 3 reasons the US hasn't seen a recession yet, according to top economist David Rosenberg
▼ + stars: | 2024-04-17 | by ( Yuheng Zhan | ) www.businessinsider.com time to read: +1 min

A recession has been avoided so far for three key reasons, economist David Rosenberg said. NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . AdvertisementThe US has avoided a long-called-for recession for three reasons, but it doesn't mean a near-term downturn has been taken off the table, according to economist David Rosenberg. This story is available exclusively to Business Insider subscribers.

Persons: David Rosenberg, —, Rosenberg Organizations: Service, Business

☆ Income investing opportunities emerge as the outlook for rate cuts moves to September
▼ + stars: | 2024-04-11 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

IEI has a 30-day SEC yield of 4.26% and carries an expense ratio of 0.15%. BINC, which is actively managed, has a 30-day SEC yield of 5.6% and a net expense ratio of 0.4%. Investors can use ETFs to tackle that space: Vanguard's Intermediate-Term Corporate Bond ETF (VCIT) has a 30-day SEC yield of 5.33%. There's also the iShares 5-10 Year Investment Grade Corporate Bond ETF (IGIB) , offering a 30-day SEC yield of 5.4%. Hunting dividend payers Higher rates have overshadowed opportunities among dividend-paying stocks, which look less attractive to income investors who can find risk-free yields easily.

Persons: it's, Michael Carbone, Carbone, Gargi Chaudhuri, Collin Martin, There's, Michael Clarfeld Organizations: Dow Jones, Traders, Federal, Treasury Bond ETF, SEC, Schwab Center, Financial Research, Corporate Locations: Chelmsford , Massachusetts, BlackRock, ClearBridge

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