Much has been made of the stock market's
strong first-quarter performance. But overlooked, perhaps, has been the bond
market, which had a terrible year in 2022 as interest rates spiked thanks to
the Federal Reserve.
Lately, though, fixed-income markets have
rallied. The two-year Treasury returned 1.68% in March, its best monthly return
since July of 2002, according to according to ICE Indices.
A big tailwind for Treasuries last month was
all of the upheaval and worries pertaining to regional banks. That made
Treasuries an attractive refuge.
I wrote about the trend for Barron's,
and why it's unrealistic
to expect the same pace of gains for the rest of the year.
Peter Baden, chief investment officer
at Genoa Asset Management, points out that a 1.68% monthly return for the rest
of the year would result in an annual result of 10.5%. He's not expecting that.
“What we do see is a satisfactory 4% yield
that can be a great place to ride out the volatility of a potential hard
landing,” he says, referring to the two-year Treasury.
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