Bond Performance During Periods of Increasing Interest Rates

Short term bonds bigstock 192321925With interest rates now rising and the Fed expected to continue to raise it’s Fed Funds rate by 25 bps at each of the next few quarterly meetings, we expect treasury yields to increase as well. Generally, higher quality longer-duration bonds perform poorly when interest rates rise, however some types of bonds tend to perform relatively well.

This blog post nicely outlines a strategy that Broad Reach Wealth Management is using for the bond positions in investment portfolios. In summary, based on historical evidence, we expect short duration bonds to outperform longer duration bonds and bonds with higher yields due to higher credit risk to outperform lower yielding, higher quality bonds.

Please click here to read more about this investment strategy.


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