MADISON, Wis. — This year could see bonds suffering a bit as interest rates on two-year and longer bonds edge modestly higher while short rates decline.
This, according to Larry Halverson, managing director of MEMBERS Capital Advisors, Inc., in his online "I've Been Thinking" blog [http://memberscapital-thinking.blogspot.com/]. MEMBERS Capital is the registered investment advisor affiliate of CUNA Mutual Group.
Halverson told blog viewers he expects stocks to look slightly more attractive than bonds in 2007. Stocks will still "have to deal with slowing economic [revenue] growth, shrinking profit margins and continued high energy and employment costs, but should benefit from their current relatively low valuations and from waning inflationary pressures."
Since lower quality issues have outperformed to the point that they now provide very little incremental yield over U.S. Treasuries, "the long-term value is in the higher quality end of the market," Halverson wrote. International stocks and bonds have generally outperformed the U.S. markets, but still look at least as attractive as their domestic counterparts, he added.
Launched in January, Halverson's blog aims to touch on retirement as it applies to him as well as clients. Halverson has previously said he plans to retire within the next one to five years.
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