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Bonds may outperform the S&P 500 in 2024 as long-term Treasurys offer ‘more bang for the buck,’ asset manager says

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  • Bonds may be a better asset class than the S&P 500 in 2024, Howard Capital Management’s CEO said.

  • Vance Howard told CNBC on Tuesday that long-term bonds remain heavily oversold.

  • “I just think you get more bang of the buck with the longer-term Treasurys right now.”

Long-term bonds may do better than the S&P 500 in 2024, Howard Capital Management CEO Vance Howard said on Tuesday.

In an interview on CNBC, he pointed to recent gains made by the iShares 20+ Year Treasury Bond ETF, which Howard starting buying a few weeks ago and has jumped 13% since the start of November.

“We’ve seen a really good rally in the bond market,” he added. “I think it’s been very productive and positive, and I think people really to look at the bonds going into 2024. It may a better asset class than the S&P, even though we think the S&P is going to do very, very well.”

As inflation continues to cool, Howard said he expects three rate cuts from the Federal Reserve next year, which central bankers suggested earlier this month are on the table.

Meanwhile, bonds are “incredibly oversold right now,” and if the Fed starts to lower rates, that will spur a massive rally in the bond market, he said.

US bonds suffered a historic crash from 2020 to October of this year, but have since rallied sharply. As Wall Street’s hopes for a Fed pivot to rate cuts took hold, bonds posted their biggest monthly gain in nearly 40 years last month, erasing losses for the year.

“I just think you get more bang for the buck with longer-term Treasurys right now,” Howard said.

He also said he remains bullish on tech stocks even after they soared this year on the backs of the so-called Magnificent Seven.

But excluding those mega-cap tech giants, price-to-earnings ratios for tech don’t look overheated as gains start to widen, Howard added.

“I think going forward this market is going to look really, really attractive, and the [Invesco QQQ Trust] could be a way to play it and diversify your book a little bit,” he said. “And I think small caps are going to do very, very also as the market broadens out.”

Read the original article on Business Insider

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