The 'two-edged sword' for investing in the fixed-income market

From the 2024 Schwab IMPACT conference, Yahoo Finance's Rachelle Akuffo and Robert Powell are joined by Charles Schwab Chief Fixed Income Strategist Kathy Jones to talk about the three big economic factors that could impact bond yields (^TYX, ^TNX, ^FVX) and the broader fixed-income market: tax cuts, tariffs, and immigration reform. "You have tariffs, which have been the big topic of conversation, and that can give us at least a one-time price increase as those imported goods are priced higher, and that's passed through to consumers," Jones explains. "Another potentially inflationary policy, but offsetting that is that it could slow growth because you get less business investment domestically if that happens," Jones emphasizes, rising term premiums as yields move higher in this economic environment. "There's a two-edged sword here. So yields are up, and yields are [at] pretty attractive levels relative to current inflation. So I look at that as an opportunity," Jones explains. "In general, you probably want to have a high credit quality, a bond portfolio — meaning treasuries, other government-backed securities, investment grade corporate bonds, municipal bonds, things of high credit quality — but not too long in duration."
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