What signals are the bond markets sending? Some investors have been on edge as long-term bond yields around the world climb to levels not seen in decades. At the same time, the markets are awaiting the Federal Reserve’s September interest rate decision, which is adding another layer of uncertainty. On this episode of Market Sense, Fidelity portfolio manager Julian Potenza, co-manager of the Fidelity Total Bond Fund, shares his unique perspective on the current environment that may surprise you, and discusses where investors may find opportunities in the months ahead.
00:00 Market Sense Introduction
01:47 Why are bond yields rising?
05:45 What do higher bond yields mean for stocks?
09:28 September Fed meeting
13:39 Treasury buyback strategy
17:47 The market’s reaction to Treasury buyback strategy
20:50 $40 trillion national debt and what it could mean for long-term bonds
22:54 Bond opportunities?
25:06 What’s happening with gold and Bitcoin?
26:47 What’s the bond story for 2027?
28:28 Timmer’s take
Questions? Drop them below 👇 and we’ll reply right in the comments.
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Is the bond market warning investors about rising debt and inflation or reflecting confidence in economic growth and the AI-driven expansion?
👇What's your take? Comment below.
Fidelity, here’s another area that deserves attention: the 1,000-result limit on your bond screener.
For investors trying to conduct meaningful fixed-income analysis across maturities, yields, credit ratings, and other criteria, this limitation creates significant unnecessary work.
To get a comprehensive view of available bonds, users must create multiple overlapping searches, download numerous files, consolidate the results, and eliminate duplicates before they can even begin their analysis.
For a platform as sophisticated as Fidelity, this seems like a relatively straightforward limitation to address. At a minimum, why not allow users to download the full universe of bonds matching their screening criteria, even if the on-screen results remain capped at 1,000?
Are there plans to address this, and if so, when? This would be a meaningful improvement for serious fixed-income investors.
That was a great show. I enjoyed both guests but Julian really impressed me with his straight shooting, no equivocating 'here's how I see it' statements. Especially enjoyed his take on Warsh which had me chuckling. I'm with his mom, I hope he's staying hydrated.
I think it's good time to accumulate AGG, and TLT shares.
just follow Mr. Buffett's mantra: "Be fearful when others are greedy, and greedy when others are fearful." This type of yield movement is quite rare.
Just because it is the best time, that does not mean it is the right thing to do.
Have bond efts last few weeks don’t seem to be doing great in my robo account.
Listen 50+ years in this investment mad house. Take a soft pitch when you can. What is never said is the waiting period for the ideal rate has to be incorporated in the worst. If the investor waits 3 months for the sweet pitch they will get struck out. I’ll take 5% for two years instead of 5.1% for 2 years after waiting for the home run pitch!
Great set up for bonds.
I’m loading up on 5 year treasuries, total no brainer at these rates
Locking long bonds the day the hike door opens is how you buy the wrong yield. I wait to see if pros are actually rotating into duration or still in risk. crowdwisdomtrading free weekly Whop keeps me from guessing the Fed path with my whole sleeve.
some of the best gobbledygook I've heard in a long time
I’m not smart enough, nor do I have the time I park my money in SGov Until another opportunity arrives at 74 years old making 4% interest plus is pretty decent
Warsh is a weak Man. Zero integrity.
The one thing i didnt hear explicity is that if you own a bond mutual fund its price or Value as in NAV will go down as yields rise. Kind of important for newbies to understand.
When you buy developed market bonds – you are funding genocide, illegal wars, human trafficking, and PDFs.
If the yield was 10 percent I would still say ´no thank you’
Amazing the amount of negativity on bonds. The media is complicit in this. The media will always tell you you should sell something when you should actually be buying it and they will tell you to buy something that you should be selling. The media is paid for by Wall Street. This is just unbelievable the negative commentary on bonds. If your house was at a 20 year low price, would you buy one two or three homes? If a Porsche 911 was at a 20 year low price would you buy one? Is it a better idea to buy an asset that is at a 20 year high price or is it better to buy an asset at a 20 year low price? We have had financial repression by the government for more than a decade with ultra low interest rate rates. Retirees can now earn a reasonably safe return with bonds. Would you buy a sweater at the highest price in 20 years or would you rather buy it at the lowest price in 20 years. If sweaters were at the lowest price in 20 years, you would probably by 10 sweaters won in each color. Most individuals like to buy things when they are on sale. Well, duh bonds are on sale. The media has everyone brainwashed regarding bonds.
Just to introduce reality: the bond market sell-off is not related to financial conditions. It is an expression of the complete lack of trust in the USA worldwide. People are getting their money out of the USA because the government of the USA is clearly not only stupid, but also 100% corrupt and quite possibly insane. So, buy bonds? Go ahead, but you are literally borrowing from someone who is morally bankrupt and pretty much fiscally bankrupt as well. You assuming you're going to get paid? Seriously, how many people do Trump and his cronies ever pay? Nobody gets paid, period. So, with a completely unreliable and erratic lender, how many people do you think want to buy? If you said "only the stupid will buy" you're correct. The country already in debt well over it's head and run by criminal idiots is not where you should place your money.
Is this actually difficult?
The piece that usually gets skipped when long yields start looking attractive: a bond fund and a bond ladder do not deliver that yield the same way. An individual bond pulls to par — you wear the mark-to-market in between, but you get the face value back at maturity, so realized return lands close to the yield you bought at. A broad fund is run to a constant maturity band, which makes it a forced seller of every bond as it ages out of the index. It never pulls to par. The price loss from a rate move gets realized inside the fund and recycled into newer, higher-coupon issues, so the recovery arrives through coupon instead of principal and takes roughly a duration's worth of time to show up. Same rate move, different shape of return. The number I'd check before buying either is effective duration against your actual holding period: if the holding period is shorter than the duration, you're taking the price risk without staying long enough for the higher reinvestment rate to pay you back for it — which is the point where "bonds got exciting" stops being the same sentence for the two structures.
5% is not exciting, although <2% was suicidal.
So we should have a small holding of international bonds?
The bond selloff is a good reminder that “safe” doesn't mean immune to losses. Rising yields can hurt existing bond prices, and that's especially important for retirees who may be withdrawing from the portfolio at the same time. I don't think the answer is abandoning bonds, it’s understanding what each part of the portfolio is supposed to do.
I like keeping the retirement core structured for stability while using Midavest as a separate, adaptive return engine when volatility creates opportunities elsewhere. Different approach, but it's been working much better for me consistently. Performance is currently tracking at roughly +31% YTD return. The biggest gains rarely come from following the crowd. They come from spotting what the crowd is missing.
The after-tax yield on most bonds does not exceed inflation. When the principal is returned at bond maturity, the value will be greatly devalued by inflation. Therefore, you don’t make any significant real yield….at best you just tread water unless you take on larger risk by extending tenor or increasing credit risk greatly. If you don’t hold bonds to maturity, interim bond valuations reflect much of the same risks as equities without the return.
I appreciate the insight. Thanks.
Learned a lot in this session. Thank you.
Long term government bonds are tracking the oil price. Maybe, yield curve control till Trump tacos on Iran ahead of the mid terms? Hard investment environment – trying to second guessing the President foreign policy manoeuvres.
You buy bonds on the way down ….. These are the times to sell your bonds
Well, if the rate was hold today, I would buy in some long bonds to lock in. Now?! The Pandora’s box of hiking is opened considering the tightness of the fundings for buying the debts, we better cool off before regretting getting our hands toasted. 😢
No thank you. A 5% yield isn't enough compensation when persistent inflation and massive debt supply could easily push yields higher and hit you with capital losses. I get that bonds rally if rates eventually get cut, but there are far better, less volatile ways to participate in growth or protect capital without tying up your money in long-duration debt.
Newbie here. If one did want to make a longer term investment in BONDS to take advantage of the higher yields, is there an ETF for that or do you have to go directly to the U.S. Treasury site?
Im buying more Vanguard Core Plus Bond ETF tomorrow !!!
11:29–11:50 🤣 so true!
Interest rates are high now, similar to 2007, 1972, and 1931. What do these periods have in common? Insatiable demand for stocks. No one wants the safety of bonds when they think they can make 30% a year in the stock market. Fed borrowing has no direct correlation with interest rates. Interest rates were high during the Clinton presidency when the government ran a budget surplus. Insatiable demand for stocks means little demand for bonds.
Long Term real rates were below the long term potential of the economy because of arbitrage between the short rates the Fed suppressed to negative real rates of return and long rates (which the Fed "doesn't control"). The arbitraged difference between the Fed controlled negative real short term rates and long rates is the carry trade of supressing real interest rates.
This dude is just reading of a tele prompter
😂😂
I know they don't want to be political but ,the sane-washing of the administration's actions are a bit much.
I joined international brokers in anticipating buying some 5 and 6 percent Treasury bonds and maybe some higher rated junk bonds
Bonds are a horrible investment right now! Interest rates are going up and inflation is much higher than the government is willing to admit. Stocks are the only place to be right now. They are the only assets that are going to meet or beat inflation. There's some risk, but a good value based portfolio with good diversification is the only smart move.
Intervention threshold or market manipulation?
What I think is humorous is Warsh says "Stop looking at the Fed for market guidance, let the market set rates independently ." Yet every discussion I've seen still say multiple times, "We'll be watching the Fed closely". After decades of fed following, I think it will take a long while, if ever, before people actually stop looking to the Fed for guidance.