Latest news with #CarolSchleif
CTV News
7 days ago
- Business
- CTV News
U.S. appeals court reinstates Trump's tariffs. Live updates here.
Carol Schleif, chief market strategist at BMO Private Wealth, shares her outlook of the market and analysis on the setback Trump tariffs got in a U.S. court.
CTV News
7 days ago
- Business
- CTV News
Trump tariffs suffer staggering setback in U.S. court
Carol Schleif, chief market strategist at BMO Private Wealth, shares her outlook of the market and analysis on the setback Trump tariffs got in a U.S. court.
Yahoo
20-05-2025
- Business
- Yahoo
ETF Strategies to Follow on Moody's Downgrade of U.S. Debt
Moody's has downgraded the U.S. sovereign credit rating by one notch, citing concerns over the country's ballooning $36 trillion debt burden. This move, following similar actions by Fitch in 2023 and S&P in 2011, raised alarm among investors about the nation's long-term fiscal sustainability. The downgrade has veered the market's focus toward Washington's fiscal policy debates. Carol Schleif of BMO Private Wealth noted that the bond market is closely watching developments in Congress, particularly as lawmakers debate a major tax bill backed by President Donald Trump and House Speaker Mike Johnson, as quoted on Yahoo Finance. Moody's expressed skepticism over current fiscal proposals, stating these proposals are unlikely to materially reduce deficits. Rising 10-year Treasury term premiums suggest that markets are pricing in greater long-term fiscal risk. Note that Term Premium on a 10 Year Zero Coupon Bond rose from negative 0.5593 in May 2020 to 0.5503 in May 2025. Meanwhile, the 30-year U.S. treasury yield jumped to 4.92% on May 19, 2025 from 4.89% recorded the day before. Despite internal Republican disputes, Trump's expansive tax-cut bill recently passed a key congressional committee. Still, market uncertainty looms over its final shape. After all, uncontrolled spending could deter investors from long-term Treasuries. The Committee for a Responsible Federal Budget estimates that the tax bill could raise national debt by up to $5.2 trillion by 2034 if temporary measures become permanent. Barclays analysts suggested that the tax plan might be less damaging than previously thought. They estimate the fiscal cost to rise by $2 trillion over the next decade — less than the prior projections of $3.8 trillion, as quoted on Yahoo Finance. However, like many analysts, we believe that the debt downgrade could eventually lead to higher borrowing costs for both public and private entities. Treasury Secretary Scott Bessent emphasized efforts to keep 10-year yields under control. Meanwhile, the White House dismissed the Moody's downgrade as politically motivated. Given this volatile fiscal backdrop and market response, here are a few exchange-traded fund (ETF) strategies for investors: Short-Term Treasuries: Limit duration risk amid rising yields. Moreover, The ETF VGSH yields as high as 4.18% annually. Investment Grade Corporate Bonds: Potentially safer than Treasuries as yields rise. The ETF LQD yields 4.48% annually. Global Bond ETFs (e.g., BNDX, IGOV): Reduce U.S. exposure by incorporating non-dollar-denominated bonds. The ETF BNDX yields 4.29% annually. Emerging Market Bonds (e.g., EMB): Emerging market bonds are higher-yielding, but come with higher risk. The ETF EMB yields 5.26% annually. Inverse Bond ETFs: Profit from rising long-term yields by investing in ETFs like TBT due to fiscal concerns. Floating Rate Bond ETFs (e.g., FLOT, FLRN): Adjust coupon payments with interest rates, reducing duration risk. The ETF FLOT yields 5.43% annually while FLRN yields 5.42% (read: ETF Strategies to Play Amid Rising Treasury Yields). Dividend-Paying Equity ETFs: Stability and income during bond market volatility. Seek exposure to dividend-focused ETFs like VYM and SCHD (read: 5 Dividend ETFs Surviving the Tariff Turmoil Past Month). Low Volatility Equity ETFs: Cushion against equity market swings linked to fiscal instability. Try ETFs like SPLV and USMV. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ProShares UltraShort 20+ Year Treasury (TBT): ETF Research Reports iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD): ETF Research Reports iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB): ETF Research Reports iShares MSCI USA Min Vol Factor ETF (USMV): ETF Research Reports Vanguard High Dividend Yield ETF (VYM): ETF Research Reports Invesco S&P 500 Low Volatility ETF (SPLV): ETF Research Reports Vanguard Short-Term Treasury ETF (VGSH): ETF Research Reports iShares Floating Rate Bond ETF (FLOT): ETF Research Reports SPDR Bloomberg Investment Grade Floating Rate ETF (FLRN): ETF Research Reports Vanguard Total International Bond ETF (BNDX): ETF Research Reports Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
France 24
19-05-2025
- Business
- France 24
Moody's downgrade amid rising debt intensifies fears over US fiscal future
A US sovereign downgrade by Moody's has exacerbated investor worries about a looming debt time-bomb that could spur bond market vigilantes who want to see more fiscal restraint from Washington. The ratings agency cut America's pristine sovereign credit rating by one notch on Friday, the last of the major ratings agencies to downgrade the country, citing concerns about the nation's growing $36 trillion debt pile. The move came as Republicans who control the House of Representatives and the Senate seek to approve a sweeping package of tax cuts, spending hikes and safety-net reductions, which could add trillions to the US debt pile. Uncertainty over the final shape of the so-called "Big Beautiful Bill" has investors on edge even as optimism has emerged over trade. The bill failed to clear a key hurdle on Friday even as US President Donald Trump called for unity around the legislation. "The bond market has been keeping a sharp eye on what transpires in Washington this year in particular," said Carol Schleif, chief market strategist at BMO Private Wealth, who said that Moody's downgrade may make investors more cautious. "As Congress debates the 'big, beautiful bill' the bond vigilantes will be keeping a sharp eye on making them toe a fiscally responsible line," she said, referring to bond investors who punish bad policy by making it prohibitively expensive for governments to borrow. The downgrade from Moody's, which follows similar moves from Fitch in 2023 and Standard & Poor's in 2011, will "eventually lead to higher borrowing costs for the public and private sector in the United States", said Spencer Hakimian, founder of Tolou Capital Management in New York. Even so, the ratings cut was unlikely to trigger forced selling from funds that can only invest in top-rated securities, said Gennadiy Goldberg, head of US rates strategy at TD Securities, as most funds revised guidelines after the S&P downgrade. "But we expect it to refocus the market's attention on fiscal policy and the bill currently being negotiated in Congress," Goldberg said. Focus on bill One question is how much pushback there will be in Congress over whether fiscal principles are being sacrificed, said Scott Clemons, chief investment strategist at Brown Brothers Harriman, adding that a bill that shows profligate spending could be a disincentive to add exposure to long-dated Treasuries. The Committee for a Responsible Federal Budget, a nonpartisan think tank, estimates the bill could add roughly $3.3 trillion to the country's debt by 2034 or around $5.2 trillion if policymakers extend temporary provisions. Moody's said on Friday successive administrations have failed to reverse the trend of higher fiscal deficits and interest costs, and it did not believe that material reductions in deficits will result from fiscal proposals under consideration. Concern shows up in market pricing. A recent increase in the 10-year Treasury term premium – a measure of the return investors demand for the risk of holding long-dated debt – is partly a sign of underlying fiscal worry in the market, said Anthony Woodside, head of fixed income strategy at Legal & General Investment Management America. Woodside said the market was "not assigning much credibility" to the deficit being brought down in a material way. Treasury Secretary Scott Bessent has said the administration is focused on containing benchmark 10-year yields. The yield, last seen at 4.44%, is about 17 basis points below where it was before Trump took office in January. "Certainly you could see a reaction in yields to a pretty substantial increase in the deficit at a time when we're already running pretty significant deficits," said Garrett Melson, portfolio strategist with Natixis Investment Managers Solutions. A White House spokesperson dismissed concerns around the bill. "The experts are wrong, just as they were about the impact of Trump's tariffs, which have yielded trillions in investments, record job growth, and no inflation," said Harrison Fields, special assistant to the President and principal deputy press secretary, in a statement. The White House characterised the Moody's downgrade as political. White House communications director Steven Cheung reacted to the move via a social media post on Friday, singling out Moody's economist, Mark Zandi, and calling him a political opponent of Trump. Zandi, who is chief economist at Moody's Analytics, a separate entity from the ratings agency, declined to comment. Some in the market believe the fiscal outlook will improve with the tax package compared to earlier expectations, due to tariff revenues and spending offsets. Barclays now estimates the cost of the bill to increase deficits by $2 trillion over the next 10 years compared to expectations of around $3.8 trillion before Trump took office. X factor? Urgency is mounting as key deadlines approach. House SpeakerMike Johnson has said that he wants his chamber to pass the billbefore the US Memorial Day holiday on May 26, while Bessent has urged lawmakers to raise the federal government's debt limit by mid-July. The US government reached its statutory borrowing limit in January and began employing "extraordinary measures" to keep it from breaching the cap. Bessent has indicated the government could hit the so-called X-date – when it runs out of cash to meet all its obligations – by August. Investor nervousness around the debt limit has started to show up. The average yield on Treasury bills due in August is higher than the yield of bills with adjacent maturities. While there is broad agreement within the Republican Party to extend Trump's 2017 tax cuts, there is a divide on how to achieve spending cuts that would help offset revenue loss. The room for manoeuvre on spending cuts is limited. Mandatory spending, including on social welfare programmes that Trump has pledged not to touch, accounted for a vast majority of total budgetary spending last year. A politically viable fiscal package will likely lead to wider deficits in the near term, and at the same time it won't provide a meaningful fiscal boost to the economy, said Michael Zezas, a strategist at Morgan Stanley, in a note published last week. Anne Walsh, chief investment officer at Guggenheim Partners Investment Management said that without a real process in Washington aimed at significantly resetting spending levels, a meaningful improvement in the US fiscal path is unlikely. "This is an unsustainable course that we're on," she said.
New Straits Times
19-05-2025
- Business
- New Straits Times
Moody's downgrade intensifies investor worry about US fiscal path
NEW YORK: A US sovereign downgrade by Moody's has exacerbated investor worries about a looming debt time-bomb that could spur bond market vigilantes who want to see more fiscal restraint from Washington. The ratings agency cut America's pristine sovereign credit rating by one notch on Friday, the last of the major ratings agencies to downgrade the country, citing concerns about the nation's growing US$36.00 trillion debt pile. The move came as Republicans who control the House of Representatives and the Senate seek to approve a sweeping package of tax cuts, spending hikes and safety-net reductions, which could add trillions to the US debt pile. Uncertainty over the final shape of the so-called "Big Beautiful Bill" has investors on edge even as optimism has emerged over trade. The bill failed to clear a key hurdle on Friday even as US President Donald Trump called for unity around the legislation. "The bond market has been keeping a sharp eye on what transpires in Washington this year in particular," said Carol Schleif, chief market strategist at BMO Private Wealth, who said that Moody's downgrade may make investors more cautious. "As Congress debates the 'big, beautiful bill' the bond vigilantes will be keeping a sharp eye on making them toe a fiscally responsible line," she said, referring to bond investors who punish bad policy by making it prohibitively expensive for governments to borrow. The downgrade from Moody's, which follows similar moves from Fitch in 2023 and Standard & Poor's in 2011, will "eventually lead to higher borrowing costs for the public and private sector in the United States," said Spencer Hakimian, founder of Tolou Capital Management in New York. Even so, the ratings cut was unlikely to trigger forced selling from funds that can only invest in top-rated securities, said Gennadiy Goldberg, head of US rates strategy at TD Securities, as most funds revised guidelines after the S&P downgrade. "But we expect it to refocus the market's attention on fiscal policy and the bill currently being negotiated in Congress," Goldberg said. FOCUS ON BILL One question is how much pushback there will be in Congress over whether fiscal principles are being sacrificed, said Scott Clemons, chief investment strategist at Brown Brothers Harriman, adding that a bill that shows profligate spending could be a disincentive to add exposure to long-dated Treasuries. The Committee for a Responsible Federal Budget, a nonpartisan think tank, estimates the bill could add roughly US$3.30 trillion to the country's debt by 2034 or around US$5.20 trillion if policymakers extend temporary provisions. Moody's said on Friday successive administrations have failed to reverse the trend of higher fiscal deficits and interest costs, and it did not believe that material reductions in deficits will result from fiscal proposals under consideration. Concern shows up in market pricing. A recent increase in the 10-year Treasury term premium – a measure of the return investors demand for the risk of holding long-dated debt – is partly a sign of underlying fiscal worry in the market, said Anthony Woodside, head of fixed income strategy at Legal & General Investment Management America. Woodside said the market was "not assigning much credibility" to the deficit being brought down in a material way. Treasury Secretary Scott Bessent has said the administration is focused on containing benchmark 10-year yields. The yield, last seen at 4.44 per cent, is about 17 basis points below where it was before Trump took office in January. "Certainly you could see a reaction in yields to a pretty substantial increase in the deficit at a time when we're already running pretty significant deficits," said Garrett Melson, portfolio strategist with Natixis Investment Managers Solutions. A White House spokesperson dismissed concerns around the bill. "The experts are wrong, just as they were about the impact of Trump's tariffs, which have yielded trillions in investments, record job growth, and no inflation," said Harrison Fields, special assistant to the President and principal deputy press secretary, in a statement. The White House characterised the Moody's downgrade as political. White House communications director Steven Cheung reacted to the move via a social media post on Friday, singling out Moody's economist, Mark Zandi, and calling him a political opponent of Trump. Zandi, who is chief economist at Moody's Analytics, a separate entity from the ratings agency, declined to comment. Some in the market believe the fiscal outlook will improve with the tax package compared to earlier expectations, due to tariff revenues and spending offsets. Barclays now estimates the cost of the bill to increase deficits by US$2.00 trillion over the next 10 years compared to expectations of around US$3.80 trillion before Trump took office. X FACTOR? Urgency is mounting as key deadlines approach. House Speaker Mike Johnson has said that he wants his chamber to pass the bill before the US Memorial Day holiday on May 26, while Bessent has urged lawmakers to raise the federal government's debt limit by mid-July. The US government reached its statutory borrowing limit in January and began employing "extraordinary measures" to keep it from breaching the cap. Bessent has indicated the government could hit the so-called X-date – when it runs out of cash to meet all its obligations – by August. Investor nervousness around the debt limit has started to show up. The average yield on Treasury bills due in August is higher than the yield of bills with adjacent maturities. While there is broad agreement within the Republican Party to extend Trump's 2017 tax cuts, there is a divide on how to achieve spending cuts that would help offset revenue loss. The room for manoeuvre on spending cuts is limited. Mandatory spending, including on social welfare programmes that Trump has pledged not to touch, accounted for a vast majority of total budgetary spending last year. A politically viable fiscal package will likely lead to wider deficits in the near term, and at the same time it won't provide a meaningful fiscal boost to the economy, said Michael Zezas, a strategist at Morgan Stanley, in a note published last week. Anne Walsh, chief investment officer at Guggenheim Partners Investment Management, said that without a real process in Washington aimed at significantly resetting spending levels, a meaningful improvement in the US fiscal path is unlikely. "This is an unsustainable course that we're on," she said.
