Maximizing Short-Term Bond Opportunities in Today’s Market
Maximizing Short-Term Bond Opportunities in Today’s Market
After a year of Fed rate hikes, Mike Diehl, CFA , Senior Portfolio Manager, discusses the benefits and opportunities he is finding in short-term bonds.
Key Takeaways
- With the 2 year Treasury yielding around 5% (at October end), we believe this presents an attractive opportunity to diversify short-duration allocations beyond just money market funds.
- Utilizing a 0-3 year strategy can protect against rate cuts, which have a more immediate impact on money market yields. Locking in attractive rates for a slightly longer period can help mitigate reinvestment risk.
- We believe that the front-end of the curve now offers attractive cushion. While longer-term yields have risen, the math favors short-term bonds. We see this area as a sweet spot, offering high income, liquidity, and protection against reinvestment risk.
Additional Resources:
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