The gift of income has been years in the making. From a 2% world to “real” yield. The yield race is on. Recently we saw the 6 month US Treasury yield hit 4.99%. We now see the 1 year US Treasury hit 5%. Why is this important?
For fixed income investors, this is a godsend. Instead of being punished for saving, savers are now being rewarded with yield. Yield in all other asset classes will adjust for whatever risk they perceive by the market. From mortgage backed securities, corporates, to high yield, the rates will adjust higher.
Keep in mind the inverse relationship that bond prices have with interest rates. As rates go higher, a bonds price may drop depending on it’s duration. This is very important because the past few years have seen bond prices drop quite a bit because portfolio durations were too long unless you with Treveri Capital.
In this volatile market it’s always important to review your portfolio.
We will next see how the Fed pulls a rabbit out of an empty hat or how the rabbit pulls the Fed out of an empty hat. Some say, “Don’t fight the Fed.” Others say, “The market is always right.” Regardless, our wealth advisors are here to help you navigate through this volatility.