The economic policies being proposed by President -Elect Trump are not what we would traditionally expect from a Republican heading to the White House. Mr. Trump’s proposals, if enacted, would rely on increased borrowing to fund economic expansion, most notably on infrastructure and defense spending. Markets have quickly priced in the rising probability of this type of deficit spending by adjusting expectations for future growth in GDP and inflation. As such, bond prices have fallen and interest ... [Continue Reading]
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On the topic of interest rates, the commonly held view is that we have nowhere to go but up. That line of thinking leads many people to believe that bonds will only lose money in the future and that they have no place in a diversified portfolio anymore. However, if the last several years have taught us anything, it’s that interest rates can indeed go lower from here. Just two years ago we would have scoffed at the idea of negative interest rates, yet nearly 30% of worldwide government bonds now ... [Continue Reading]