Municipal bonds might perform better than stocks if the Fed decides to keep its key interest rate steady but elevated for the rest of year, says Nuveen.
Municipal bonds may perform better than stocks, if the Federal Reserve decides to keep its key interest rate steady but elevated for the rest of year, defying expectations for rate cuts, according to asset-management company Nuveen.
Stock investors may have overestimated the chances for the Federal Reserve to start cutting interest rates by year-end, according to Nuveen, which manages $1.1 trillion assets, echoing some other major investors such as Blackstone’s chief operating officer Jonathan Gray. U.S. stocks have rallied so far this year, with the Dow Jones Industrial Average DJIA up 2.2% and the S&P 500 SPX gaining7.8% year-to-date. The Nasdaq Composite COMP , which has been leading the rally, has advanced more than 15% so far this year, according to FactSet data.
“While there are no guarantees similar results will be repeated, fundamentals appear healthy and vibrant, with municipalities collecting revenues and building reserves to levels not seen in more than 40 years,” Malik wrote.
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