Cautious on F

[eukrate]

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The Sept core CPI of 0.3% exceeded the expected 0.2%. It is therefore probable the FOMC will continue raising the FedFunds rate - thereby creating a headwind against bonds. Prudent TSP'rs might consider reducing their F allocation.


Go Red Sox!

 

[tsptalk]

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Finally! Thanks.

 

[Mike]

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That is certainly true, but with the continuing volatility in the stock market, people will continue snapping up bonds - even at their currently cruddy yields... so F could continue to defy conventional wisdom and produce gains in spite of rising prices/ interest rates. :shock:

 

[clester]

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My inderstanding of th F fund is that it usually goes up when interest rates go up.

 

[eukrate]

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Bond prices DROP with increasing interest rates since the coupon is fixed. To keep things complicated however, prices respond to other factors too, so increasing rates represent only one force in determining the price.