Arabic version: مستثمرو السندات يدرسون آجالاً أقصر مع ارتفاع العوائد
According to Cnbc, the 10-year Treasury yield reached its highest level since 2023 on Wednesday as investors assessed higher interest rates, inflation concerns, a roughly $2 trillion federal deficit and more than $40 trillion of government debt. Financial advisers said investors should avoid making long-term portfolio changes solely in response to short-term headlines.
Ian Toner of Cerity Partners said investors should consider whether economic or market conditions have fundamentally changed before moving money. Marta Norton of Empower said higher yields can improve prospective bond-market returns for buy-and-hold investors, even if bonds no longer have the tailwinds of past decades.
Strategists cited diversification across fixed-income maturities and securities as one response to uncertainty. Options mentioned included broad-market bond ETFs, short-duration ETFs, Treasury inflation-protected securities, corporate debt and floating-rate debt. Ultra-short bond ETFs drew $12.8 billion of inflows in July, according to Morningstar Direct.
Mark McCarron of Wescott Financial Advisory Group said he has favored high-quality bonds with durations of three to five years or less. Erik Kratz of Arena Private Wealth said he has purchased five- to seven-year Treasury bonds yielding 4.51% to 4.63%, while also seeking high-quality corporate debt with opportunities in the 5% range and above.
Some advisers are also considering inflation protection. Ken Roban of Reservoir Road Wealth Management said he is buying TIPS for retirement accounts, laddered across maturities of five to 15 years. Norton said investors concerned about fiscal policy and geopolitics could consider gold for 5% to 10% of the bond portion of a portfolio, while cautioning that commodities can be unpredictable.
For investors reducing bond exposure, McCarron warned against shifting entirely to cash because cash does not beat inflation. He said portfolios can retain some duration for yield and balance during an economic slowdown, while avoiding positions that are too long.
