|Kathy Jones – Charles Schwab
Monetary Tightening and Inflation Could Wake the Bond Bears
Summary: Fixed income investors appear complacent to fundamental shifts in the bond market. Jones says that the Fed’s plan to shrink its balance sheet, along with strong economic growth pushing up inflation, will lead to higher interest rates. With all signs pointing to higher interest rates, it is likely that fixed income returns will be driven by the income generated by bonds rather than price appreciation.