Why bonds are shaping up to be the new alternative investment

investmentnews.com:

With the tech-led rally in the stock market pushing theS&P 500 Index up nearly 17% from the start of the year, it would be easy to overlook the opportunities in fixed income, but investors are finding a host of options for safe and decent yields.

While the yield curve remains inverted, with shorter-term bonds offering higher yields than their longer-term counterparts, it’s easy to find yields above 4% well down the curve, and with even money markets hovering around 5%, financial advisors will have portfolio allocation decisions to make.

“We don’t think the Fed will cut rates for some time, so right now bonds are the alternative to the traditional stock market,” said Max Wasserman, founder and senior portfolio manager at Miramar Capital.

“If you need long \-term returns above the rate of inflation, you have to put capital at risk,” Wasserman said. “But if the time horizon is short term, it looks very tempting to load up on short-term fixed income.”

Even though advisors and analysts find it easy to criticize the Fed’s monetary policy and flat-footed response to spiking inflation, there’s no denying that the current appeal of fixed income links directly to the Fed. And because it’s becoming difficult to imagine a near-term scenario in which the Fed will be cutting interest rates, advisors and analysts see an ample buffet of bond options.

“We see a lot of value having been restored to fixed income and we think it’s a good time to be dollar-cost-averaging back into bonds,” said Steve Hooker, managing director and senior portfolio manager at Newfleet Asset Management.

Like most folks, Hooker describes the economic data as “mixed,” muddied by record stimulus spending still coursing through an economy that is somehow defying the