Recently, significant progress was made in trade negotiations between the U.S. and China in London, with both countries reaching a principled consensus on a trade framework to pave the way for a formal agreement. Market analysts pointed out that if the U.S. and China can implement reciprocal policies on certain tariff items in the future, it would help stabilize China's foreign trade orders and alleviate inflationary pressures in the U.S. Currently, U.S. Treasury yields have started to drop from 4.5%, indicating a gradual increase in confidence in the bond market. Investing in high-quality bond ETFs is expected to provide stable returns and diversify stock market risks.

With the ongoing increase in the number of individuals opening securities accounts, more and more people are choosing to invest in ETFs each year. A significant number of investors are opting for income-generating bond ETFs, becoming long-term ‘fixed-income deposit’ investors. These bond ETFs not only excel in asset allocation but also provide monthly or quarterly payouts, and their annualized yield often surpasses traditional fixed deposits, making them a favored investment tool for young people looking to generate future cash flows.

According to CMoney statistics, in June this year, a total of 41 bond ETFs had ex-dividend distributions. Observing the annualized yields of these bond ETFs, non-investment-grade bond ETFs showed the highest yields. Considering the long-term investment strategy with a balance of risk and returns, BBB-rated investment-grade bond ETFs stand out, including Shin Kong BBB Investment-Grade Bond 20+ (00970B), Taishin Select IG Bond 10+ (00980B), and Yuanta High Dividend Investment-Grade Bond (00968B), with all three ETFs showing annualized yields exceeding 7%.

Liu Hengzhi, manager of Shin Kong BBB Investment-Grade Bond 20+, noted that last week's U.S. non-farm payroll data performed well, indicating a low probability of an economic recession in the U.S. However, uncertainties due to the TACO trading fervor instigated by Trump since April have significantly increased, affecting corporate investment decisions and labor employment. It is also possible that consumers may increase savings, lower consumption, thereby reducing the potential growth momentum of the U.S. economy. The market is expected to remain in a state of high volatility, but high-rated bond products are still likely to attract funds, and the outlook for high-quality bond ETFs remains positive.

Looking ahead to the second half of the year, the bond investment team at Shin Kong Investment Trust suggests that the U.S. economy will face tariff pressures in the third quarter, with companies having to bear some of the tariff costs, leading to a slowdown in corporate growth and profit correction risks, causing stock prices to fluctuate. However, the Federal Reserve may have the opportunity to lower interest rates in the second half of the year. It is advisable for investors to prioritize high-quality bonds in developed countries to protect their investment portfolios against possible market fluctuations.

In terms of investment advice, Liu Hengzhi emphasizes that investors should consider the highly liquid U.S. bond market, targeting high-rated (BBB grade and above), high-yield, and high coupon rate bonds (>6.5%) and allocate them to industries less affected by tariffs and resilient to economic cycles, such as core consumer goods, utilities, telecommunications, healthcare, and financial sectors. Alternatively, investors can choose to hold BBB-rated investment-grade bond ETFs as a basket of high-quality corporate bonds, taking advantage of the currently relatively high yields of U.S. 10-year Treasury bonds, which are still around 4.5%.