By coinnews 
00:00 Speaker A
And Cathy, talk to me about bonds as kind of a cheap diversifier here. To what extent are you anticipating that all of these factors, including what you mentioned as a trade war instead of a one-time inflationary impact of tariffs? How could that impact the bond market? How should investors be thinking about positioning in the bond market off of that?
00:24 Cathy
Yeah, it’s it’s a mixed bag for the bond market. On the one hand, um, tariffs raise prices and potential inflation down the road, but they also slow growth, particularly when you get retaliatory tariffs. And, um, we have other factors, such as the Deutsch cuts, potentially slowing growth as well. So, in the long run, I think that this is positive for the bond market, and we’re seeing some bid on days when the stock market goes down for bonds as a safe haven, which makes sense. On the other hand, because there’s potential inflation on the horizon, we’re being pretty cautious about extending duration right here. Um, at four and a quarter or four 30 or so 10-year yields look to us okay, uh, maybe well balanced between those two forces. Uh, but we don’t really want to extend duration in case the inflation pressure show up before the the growth slowdown shows up, and that’s the debate going on in the market. So, you know, we’re advocating, um, what we call a benchmark duration, and for us that’s the duration of the aggregate bond index. That’s around six years. Uh, has a yield to worst about 4.65%, 4.7, I think, this morning. That gives you a high-quality investment grade portfolio or portfolio index, um, with not too much duration, but enough to take advantage of of the yield that’s offered. And the yield is pretty decent as a baseline, and then I would add other asset classes around that. But be really cautious about credit, uh, because in this environment, if we get a real growth slowdown, then I think those spreads and high yield in particular will continue to rise.