Investing - Theory, News & General • At what point does BND become attractive?

I still have most of the fixed income part of my portfolio in a Money Market and have been waiting for an attractive entry point into BND. Unfortunately when BND reached it's nadir, when the 10 year hit 5%, in October 2023 it was a great opportunity that I missed. I guess that is what happens with market timing.

I still feel interest rates are way too low for many reasons including -

Intermediate rates are still WELL below their historical average of 5-6% and if you look at the long term chart the past 20 years are a anomaly caused by dysfunctional monetary policy, granted a lot of the "correction" has already taken place with the 20% haircut in BND.

Government spending isn't going to abate so the logic of demand and supply has to be that rates rise, anything else isn't logical. The era of the Fed printing money to cover up runaway government spending is over due to the inflation boogeyman which has spooked the Fed. At the very least they are going to let their existing paper mature, at the most they will actively sell their holdings. Both situations will cause a significant rise in rates as the Treasury floats paper while the Fed sells even more paper. I simply can't envision all of this happening at a 4% Intermediate rate which as I mentioned is WELL below the historical average even when none of this supply/demand characteristic was on the horizon.

Generally I would advocate the Bogle heads philosophy of NOT market time, BUT since the Fed is not allowing the asset class to participate in the free markets all bets are off and the fixed income asset class is not being allowed to function like it normally does.

Just my $0.02

Statistics: Posted by Tom_T — Tue Feb 27, 2024 4:26 pm — Replies 137 — Views 21983