Q: Feels like the right time to step into long term bonds. Do you agree and what would be your maximum allocation in an income portfolio? Thanks as always.
5i Research Answer:
We think one can accumulate long bonds, but we also said that nine months ago. The drop in interest rates is taking its time coming. The trade is likely easier in Canada than the US. Expectations for rate cuts have shifted in the US. But we think the trend will still be down, over time. A rebound in inflation would be the main risk. Long term bonds can be very volatile, and we would be reluctant at more than 10% exposure.