Bill Walsh, Hennion & Walsh founding Partner, as year-end nears, discusses muni strategy with the Bond Buyer’s Christine Albano.

The market is factoring in one additional 25 basis point increase to Fed target rate after the Fed’s last meeting Dec. 18 and 19, which would leave the target rate in a range of 2.25% to 2.50%, said Bill Walsh, president of Hennion & Walsh in Parsippany, New Jersey.

Walsh said rising rates are unlikely to affect the interest that bond holders receive on their holdings, and shouldn’t hinder investors from receiving par value on their securities at maturity. He suggested investors should maintain higher levels of credit quality and not sacrifice income levels as they strategize for year end.

“Investors should be careful not to miss out on the income and diversification opportunities offered by bonds by trying to time future, potential changes in interest rates,” Walsh said in an interview.

“We believe that recent dovish comments by Fed Chair Powell, coupled with an expected slowdown in earnings and economic growth in 2019, will slow the original plan for three additional rate hikes in 2019, to perhaps two, or maybe just one, during the first half of the year,” Walsh said. “This slowdown in economic growth and interest rate hikes should be factored in accordingly by investors.”

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