Displaying items by tag: fixed income

Thursday, 07 August 2025 03:57

What’s Driving the Annuity Surge

Annuities, once sidelined as overly complex or narrowly useful, are now experiencing a surge in demand as investors prioritize stability, protection, and predictable income in a volatile economic landscape. This shift is driven by pre-retirees and retirees rethinking traditional equity-focused strategies and seeking solutions that mitigate risks like sequence-of-returns. 

 

Fixed and fixed indexed annuities, in particular, offer competitive yields, downside protection, and guaranteed income, features especially appealing to mass-affluent households with limited pension coverage. 

 

The Great Wealth Transfer is also fueling interest, as boomers explore annuities not just for income but for legacy planning as well. Meanwhile, advances in digital tools and platforms have made annuities more transparent, accessible, and easier to incorporate into holistic financial plans. 


Finsum: Even as interest rates fluctuate, annuities are expected to remain a core solution for those seeking long-term financial confidence over short-term market gains.

Published in Bonds: Total Market
Tuesday, 05 August 2025 08:19

Economy Weakens and Treasuries Rally

U.S. Treasury yields plummeted, particularly on short-term notes, after July’s jobs report came in significantly weaker than expected, reigniting investor expectations for an imminent Federal Reserve rate cut. 

 

The two-year yield dropped 25 basis points to 3.71%, its steepest one-day fall in a year, as traders priced in an 80% chance of a rate cut at the Fed’s September meeting. The labor data showed just 73,000 jobs added in July, well below forecasts, and revisions to prior months brought the three-month hiring average to a pandemic-era low of 35,000. 

 

The market’s reaction signaled a dramatic pivot in sentiment, further fueled by political pressure from President Trump and dovish dissent from two Fed governors. Treasury futures volumes surged as traders abandoned flattening yield curve bets, and BlackRock analysts now anticipate a 50-basis-point rate cut in September, with more to follow by year-end. 


Finsum: The Fed can afford aggressive easing without stoking inflation, setting the stage for a bold monetary policy shift.

Published in Wealth Management
Monday, 28 July 2025 07:46

The Present State of Munis

So far in 2025, investment-grade bonds have generally delivered modest gains, but municipal bonds have bucked the trend with disappointing performance. The iShares Core U.S. Aggregate Bond ETF (AGG) returned 2.85% through mid-June, while the iShares National Muni Bond ETF (MUB) declined by 1.29%, despite their similar credit quality and low fees. 

 

One key difference lies in liquidity: municipal bonds are often held long-term, making them harder to trade, with wide bid-ask spreads that erode value during redemptions. Outflows from MUB and uncertainty around tax policy, especially the fate of the 2017 tax cuts, may also be pressuring muni prices. 

 

For investors in high tax brackets, limited allocations to diversified, low-cost muni funds may still be warranted, but caution is advised, and exposure should generally stay under 20% of fixed income holdings.


Finsum: Structural issues, like the possibility of reduced federal funding for states and large unfunded liabilities, further cloud the muni bond outlook.

Published in Wealth Management

Married retirees with an age or income gap can significantly reduce their Social Security tax bill in 2025 by delaying benefits and strategically using the new $6,000 Senior Deduction. For example, when the older spouse defers Social Security until age 70, it not only boosts lifetime income but also helps lower the couple’s current combined income, keeping more benefits tax-free. 

 

Roth IRA conversions during low-income years and Qualified Charitable Distributions (QCDs) after age 70½ are smart ways to cut taxable income without losing access to deductions. The Senior Deduction becomes especially powerful when couples keep their Modified Adjusted Gross Income (MAGI) under $150,000, the cap for eligibility. 

 

By timing withdrawals from IRAs to coincide with lower earning years and coordinating the younger spouse’s income, couples can avoid tipping into higher Social Security tax brackets. 


Finsum: A well-planned mix of benefit delays, tax-efficient withdrawals, and smart giving can make retirement income go further while keeping taxes in check.

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Published in Wealth Management
Saturday, 19 July 2025 11:43

Investors Need Options for Income Investments

Derivative income ETFs are becoming more popular among financial advisors seeking reliable income amid ongoing market volatility. A 2024 Cerulli Associates report found that 15.2% of advisors are already using these strategies, with another 7% planning to adopt them soon. 

 

These ETFs, which generate income by selling options, have attracted over $55 billion in inflows across 2023 and 2024, with the strongest uptake seen in wirehouse channels. As inflation concerns and demand for consistent yield grow, product development is accelerating—6% of ETF issuers are actively building new funds and 13% are in planning. 

 

Advisors are also increasingly interested in defined outcome ETFs, which offer preset downside protection, though adoption remains more limited for now. 


Finsum: Overall, both categories reflect the shifting demand toward more predictable, income-focused solutions in today’s uncertain markets.

Published in Wealth Management
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