The markets rallied this afternoon after the Federal Reserve announced it would not be raising interest rates this quarter. The Dow surged over 100 points, with the Nasdaq and S&P 500 having rallies of their own. On “Closing Call,” CNBC's Maria Bartiromo asked a bond fund manager and a chief investment officer for their take on the year ahead in trading.
John Miller is the portfolio manager of the Nuveen High Yield Municipal Bond Fund at Nuveen Investments. He says there has been a sell off in the bond market over the past few months despite the stronger economy. On the positive side, inflation concerns are receding, so he sees no reason for the Fed to raise rates in 2007.
“It looks like a soft-landing scenario is very much in place,” he says.
Miller gave us his bond buys for next year: a focus on longer-term bonds with some high-yield exposure. Solid economic growth with the Fed on the sidelines equals low default rates, he says, and that’s a good environment for higher-yielding bonds.
On the stocks side of the equation, Mark Jordahl just as positive. He’s the chief investment officer at First American Funds, and he says some key factors of the economy are doing well – GDP, housing and inflation.
“That’s nirvana for the investors,” he says, “and the equities markets ought to do quite well.”