Deep Dive: Take advantage of this sweet spot in the bond market now to bolster your portfolio

by | Oct 26, 2022 | Stock Market

The bond market is now offering investors a sweet deal, with short to intermediate maturities providing a good combination of risk and reward. When interest rates rise, bond prices fall. The longer the maturity of a bond, the more sensitive its market value will be to changes in interest rates.

This means that as the Federal Reserve continues to raise interest rates to clamp down on inflation, bond portfolios with shorter maturities will be safer day-to-day. And the inverted yield curve, with two-year U.S. Treasury notes
TMUBMUSD02Y,
4.420%
yielding more than 10-year notes
TMUBMUSD10Y,
4.010%,
underscores the opportunity investors have to earn higher yields while taking less risk than they would with longer-term bonds. Jim Dadura, director of fixed income at Segall Bryant & Hamill in Chicago, which has about $21 billion in assets under management in mutual funds and private and institutional accounts, dug into some of the technical factors underlining how attractive the intermediate maturities are today.With bonds, the time to make a move is now During the long period of historically low interest rates and a rapidly increasing money supply through 2021, the obvious place for investors seeking growth or income was the stock market. But we are in a different environment now, following aggressive moves by the Federal Reserve to raise interest …

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