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-- much and thank them.
Despite talk about -- -- meeting -- in Vegas odds on the -- to date.
I mean just hearing a working -- goose bumps for certain investors.
But with the inevitable wind down up quantitative easing the stimulus right that the Fed is inserting -- the marketplace along with the recent volatility in the bond market it's caused.
Should retirees be concerned about their fixed income investments being -- proof.
Well known -- adapting -- -- fixed income strategist for Jennie Montgomery Scott KD so we heard some hawkish fed voices this morning.
What's your take from that -- you think tapering will commence.
Well for so we know that it's gonna happen right the Fed can't keep buying an infinite number of bond sound -- just doesn't work that way.
In the statement that the Ben Bernanke made really on June 19 puts a relatively narrow range -- the possible -- dates.
To me it's much more important -- that and is occurring in relatively soon in the specific date but our money right now are Vegas oddsmakers on the November.
Appreciate that appreciate the specificity.
I -- about the broad market right now where do you see rates.
Going you know we look at the international picture and -- are new security concerns that the US embassies closing in various hot spot nation so.
Do you think that that will send global investors backing the perceived safety of US government debt -- DC interest rates actually rising here.
Our forecast is for year -- -- be pretty close to where they are right now.
Now that said the risk in the long term bond market is certainly a lot higher than it's been and any time in recent memory.
But when you bring up the idea of geopolitical risk that's sort of a positive risk factor for the bond -- conceptually.
Now I think we priced in this sort of specific information about embassy closings.
We haven't priced in the unpredictable and hopefully does not -- event of an actual attack -- natural disaster that.
That unfortunately is very hard to predict and I can't them and suggests investors really place their bets on on that type of event.
So if you are investing in fixed -- how near medium or long term should you be thinking what's your advice.
But we think kind of the best area air right now is in the neighborhood of three -- -- -- seven years.
And that reflects the fact that over time the Federal Reserve is most likely to withdraw not just taper their bond purchases but also withdrawals in the short term stimulus.
But that's not likely to come for probably three to five years down the road at the soonest.
And says he can -- to that time rise in your taking advantage of low rates in the front end of the curve.
And we'll hopefully be able to reinvest at a time when rates are a little bit higher -- three to five years down the road thereby ensuring a greater total return than if you just went out very long right now.
And any more complex instruments that you like you know within a fixed income space floating rate notes -- -- you.
Had a commentary on that when -- -- earlier notes what about Munis do they still offer you know the tax -- -- and they do but is that still worth it.
It's actually north and you got to keep in mind that with via Affordable Care Act the health care tax and went into effect in January 1 of this year.
The effective income or the effect of return on tax exempt income is much higher in on the top marginal tax rate is nearly 44% at this point.
And that allows for somebody earning a tax exempt income in the media markets that sort of take a higher cut -- compared that is supposed to taxable on.
The other area we do like as a reference is a floating rate side and a specific structure called fixed to floaters user instruments.
That say for the first five years of their life carry -- fixed coupon higher fixed rate coupon.
And then convert to a floating rate bond in the back and then hopefully -- floating rate bond sort of acted dates if you will at a time when the Fed is looking to raise rates and so that's a good way to reduce interest rate risk and still return a decent up front and okay you -- -- thanks for your ice.
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