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Jacob Sonenshine: Trump and Xi Jinping just agreed to a trade ceasefire bond yields are rising here to tell us how to invest in bonds as Marc Pfeffer, a chief investment strategist for CLS investments. Mark, thanks for being here.

Marc Pfeffer: Thanks. Nice to be here Jacob.

Jacob Sonenshine: So treasury yields are rallying. At what point does the 10 year treasury become an attractive entry point?

Marc Pfeffer: I would say at this point, if it backs up by 25 to 50 basis points to, so let's say two and a quarter to two 50, I think is a good entry point. I do think the market's a little bit expensive right now, getting ahead of itself.

Jacob Sonenshine: Now, might the Federal Reserve continue to hold the position that, yep we might cut rates, Is that still in the cards?

Marc Pfeffer: Absolutely, I believe so. The data has been weakening over for the last several months. The inflation, certainly that picture has been weaker and right now I don't think that this necessarily changes anything. There's now a whole bunch of data to come out. We have the payroll numbers on Friday, you'll get a whole new set of employment numbers as well as retail sales. And if those numbers come in as expected and not much better than expected, I think there's a very good chance that the federal lower rates at the end of this month.

Jacob Sonenshine: Okay. So if they do, and you get maybe a little bit of a rise on the tenure, it's rising a little bit Monday. If that continues a little bit, does it maybe not attractive, but does it become a little bit more attractive from an interest rate standpoint?

Marc Pfeffer: On the long end of the curve, I don't think right now it is. I actually, I right now I would actually advocate clients to stay more to the shore on the curve. I'd be a seller of the long end of the curve. And if the Fed does actually lower rates at the end of this month to try to reignite inflation, that should send bond yields on the long end of the curve a little bit higher.

Jacob Sonenshine: Okay. Now end cycle, let's talk to defensive investors a little bit. So those are still years. You're not advocating for 10 years. Right now. You're advocating for the shorter end of the curve. But where just in general in bond land, is it best to get strong income, where there's minimal credit risk?

Marc Pfeffer: Well, minimal credit risk right now.,I still think investment grade corporate bonds with high quality bonds are probably the best place to go if you're looking for income with safety. But even that market is a little bit expensive right now. Almost all of the fixed income market right now is expensive. We've had a great first half of the year. If you look at the bond AG, which is not necessarily the best proxy, but the one that we really have in the bond market is it's returned about 6% year to date. So I think a lot of the returns, the better returns that you've received in fixed income in 2019 have already been achieved. High yield has also, you know, returned about 10%. Emerging market debt is a place I do still like. But right now collecting coupons is probably the best you can anticipate, expect to it to receive for the remainder of 2019.

Jacob Sonenshine: Just from a price perspective. Real quick on EM credit, how much return do you think there is for the rest of the year?

Marc Pfeffer: I would say that maybe you can get, you've gotten about 10% or so. The first half of the year, maybe you can get between 2-4% for the second half of the year. I do think a lot of emerging countries will continue to lower interest rates. So impossibly you get a little bit more than your coupon, but that's about all I think you can expect.

Jacob Sonenshine: All right. Thanks for being here, Marc.

Marc Pfeffer: Thank you.

Jacob Sonenshine: All right.

The G-20 meeting between Trump and China's leader Xi Jinping spelled positive news for trade, but many still see economic data remaining where it's been. 

That means, as treasury yields rise, they could soon become a nice pick up for defensive investors. 

Even though there will be no added tariffs on either side for the foreseeable future, economic growth and inflation still may not move much higher. Will the Federal Reserve still cut interest rates? "Absolutely. I believe so," Marc Pfeffer, chief investment strategist for CLS Investments said. "The data has been weakening for the last several months, the inflation, certainly that picture has been weaker [sub 2%]," he added. "I don't think that this [G-20 talks] necessarily changes anything."

Meanwhile, the ten year treasury yield has risen to 2.028%, as investors are slightly more optimistic on growth and inflation for the moment, but Pfeffer likes the short end of the yield curve for now, as the ten year still doesn't offer great real return. 

Here's when it would offer such a return:

"At this point, if it backs up by 25 to 50 basis points," treasuries would pose little interest rate risk and a strong real yield. "Let's say two and a quarter to two fifty is a good entry point."

But here's where Pfeffer says is a good place to buy right now:

"Investment grade corporate bonds with high quality bonds is probably the best place to go if you're looking for income with safety, but even that market is a little bit expensive right now," he said. S&P 500 corporate bond prices have risen about 9% year-to-date. Elsewhere, Pfeffer likes emerging market debt. 

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