During the last few days, the U.S. Congress took steps to move toward the passage of the very important tax reform legislation. Its passage is a plus for the stock market but will probably be a negative for bond investors. While passage is not assured, we estimate the probability of passage has increased to higher than 50%. And, if Congress is able to pass the tax reform bill, it is likely to have the power base necessary to pass an infrastructure spending bill which could authorize as much as $1 Trillion – another plus for the stock investors and a negative for bond investors.
Note also that we have already structured the bond portion of the portfolio to reduce the negative effect of rising rates