Long-term investors should ignore the day-to-day noise around interest rates and focus on generating income over the next decade, according to Lauren Goodwin, economist and chief market strategist at New York Life. It's easy to get caught up in the day-to-day happenings, especially during a week like this one, said Goodwin, who appeared on a special CNBC Pro panel on the sidelines of the Future Proof Conference in Huntington Beach, California. The Fed is set to cut interest rates for the first time in four years on Wednesday, and an election is looming in November. (See the full panel above.) “If you're looking at a five-, 10-, 15-year investment horizon, the ebb and flow of Fed rate cuts and election cycles don't really matter,” Goodwin told host Dominic Chu. Where to invest: Bonds and AI The strategist said interest rates will likely remain elevated for the next decade because neither party will address deficit spending. To capitalize on this backdrop, Goodwin suggests focusing on a revenue strategy through both investment-grade corporate bonds and municipal bonds. Municipal bonds are also related to building artificial intelligence infrastructure. “We see very attractive potential opportunities in the municipal bond space,” he said. “Depending on what investors are looking for, there are ways to lock in higher interest rates while balancing the potential for interest rate risk in the medium term.” Goodwin also sees investing in AI as a smart strategy in the long term, and sees continued large-scale investment in the space. “The foundational layers of AI — the Magnificent Seven, the chipmakers, and the big players — are key players in the space,” Goodwin said. [it’s] “We're still in the early stages of infrastructure,” she said, “but as we see use cases for AI from consumers, as well as governments and enterprises, I expect investment to continue — but probably scale up.”
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