Schwab: Say Farewell to Foreign Bonds Due to Stronger Dollar

Investors should reduce their exposure to foreign bonds and commodities as a result of the strengthening dollar, said Kathy Jones, Fixed Income Strategist for Charles Schwab. Jones added that foreign bond performance will likely lag that of U.S. bonds as the dollar strengthens and this is especially true in the developed country bonds where yields tend to be lower. Jones said the major trend in 2015 will be a flatter yield curve, particularly if inflation remains close to the 2% target level. Finally, Jones said she is positive on intermediate duration higher quality bonds like Treasuries, investment grade corporate and municipal bonds.