For bond traders, 2023 has been one of the most volatile years in recent decades. It’s not entirely surprising given the various forces impacting the market such as inflation, a hawkish Fed, a slowing economy, and significant strains to the banking system.

In a Bloomberg article, Michael Mackenzie and Liz McMormick discussed reasons why these conditions will persist for the remainder of the year. In response, investors are looking to remain nimble and flexible especially given wide swings and a risky environment. 

Bond traders are expecting this uncertainty to continue as long as the Fed continues its hiking cycle and gets clear when it will start cutting rates. A major factor in Treasury inflows has been the slowing economy as recession fears increase, however the labor market continues to add jobs, and the economy continues to expand. Additionally, the recent spate of bank failures and financial stress also was supportive of Treasury inflows. 

Maybe the best illustration of the volatility is the 2-Year Treasury yield which got as high as 5.1%, following Fed Chair Powell’s hawkish comments. And. it got as low as 3.6% a few days later amid the failure of Silicon Valley Bank.

Finsum: The bond market has experienced incredible volatility in Q1. However, odds are that this volatility will continue all year. 

The Land of Oz? Um, not exactly.

While clearing the Kansas legislature, a proposal aimed at standing in the way of investing that bears in mind environmental, social and governance factors, butted against headwinds; namely, divisions within its GOP minorities that have watered down the measure, according to timesunion.com. It represented a setback among some conservatives.

In the last two years, Oklahoma, Texas and West Virginia are among at least seven states that have enacted anti-ESG laws. Additionally, two GOP governors, Florida’s Ron DeSantis and Greg Gianforte of Montana moved to ensure the funds in their states weren’t invested with ESG principles in mind.

“We right here wanted to focus on what we control — state pensions, state investments, government contracts, stuff like that,” said Republican state Rep. Nick Hoheisel, of Wichita, chair of the House committee handling the legislation, reported usnews.com.

“It’s still a panicked response to a fake issue that’s been created by right-wing media,” said state Rep. Rui Xu, a Kansas City-area Democrat.

Those who are aligned with ESG principles maintain that, financially, it makes sense to keep in mind  issues like whether a shift to green energy adds more risk to investing in fossil fuel companies.

In real estate, you might have heard, it’s location…location….and well, yeah.

Now, in financial services, the client calls the shots: their needs, wants. location, where they’re headed and who they can refer on their way there rule, according to usnews.com. Financial advisors have to know their stuff – and more – in the art of generating new clients and engaging those who are already onboard.

One component of an adviser’s role is boosting the knowledge of clients when it comes to gaining a sense of what it takes to meet their goals, according to business owner Vanessa Bester, reported thinkadvisor.com.

How, you might ask? By lending a hand with debt financing or wealth management. Guidance and financial management services like investment management, budgeting and insurance all are in a financial advisor’s wheelhouse.

A financial advisor should pinpoint their niche by homing in on what they do well, their skill set and knowledge. They’ll rise above the competition with a niche. And darn their your expertise might  resonate – and loudly -- among prospective clients.

Growing a financial advisor practice is a challenging but rewrarding journey. It will force you to build new skills and marketing yourself in order to find the best clients. In an article for SmartAsset, Rebecca Lake CEFP laid out four key steps for advisors to grow their business.

The first step is to determine who is your ideal client and what niche will you be serving. Specializing in a particular segment will lead to more expertise and trust, leading to longer-lasting relationships and a more sustainable practice. It will also lead many people to seek you out, because they will find greater comfort.

The next step is to write a mission statement. This will help clarify your values, priorities, and motivations. It should be shared with your prospective clients so they have an understanding of how you do business. Not only will it help with conversion, but it will screen out candidates who aren’t a good fit.

Another important step is to get involved in the community which will increase the visibility of your brand and create opportunities for connection with prospects. This also leads to face to face interactions which are often the most impactful.

Finally, advisors should also embrace digital marketing. Younger clients are likely to find you online and will also likely have read reviews. You should have a comprehensive digital strategy and utilize social media, a user-friendly website, and email marketing. You can favor the platforms where your clients are likely to be found.

Finsum: Growing a financial advisor practice can be challenging but rewarding. Rebecca Lake CEFP lays out 4 steps that advisors should take.

In an article for CNBC, Sean Conlon discussed some factors behind the rise in demand for fixed income ETFs. Despite some softening in the economy and in terms of inflationary pressures, the Fed seems intent on hiking by another quarter point at its next meeting. 

This is leading to juicy opportunities in the fixed income space which may not last if inflation does continue to trend lower or a recession materializes in the second half of the year. Additionally, current futures markets are forecasting that the Fed will be cutting rates by the end of the year. As noted by Vettafi, this dynamic is leading to inflows into Treasuries, corporate bonds, and high-yield bonds as investors look to lock in duration and yields.

Since the start of the year, there was about $45 billion in inflows into fixed income ETFs. Another factor behind this demand is the underperformance of traditional asset allocation models like 60/40. This is leading many investors to get more conservative and examine the fixed income space for opportunities.Until market stresses ease, demand for fixed income ETFs should remain elevated. 

Finsum: Fixed income ETF demand rose sharply in Q1. Given the Fed’s hawkish bent and current market conditions, this should persist.