Treasury yields have reached their highest levels in years, with the 10-year yield at 5.179% and the 30-year at 5.469%. This increase is driven by concerns over federal debt, inflation, and the strength of the economy, leading to expectations of further rate hikes by the Federal Reserve.
Rebecca Venter from Vanguard notes that investors seeking income now have better starting yields compared to a year ago, suggesting a more balanced outlook for future returns. Experts recommend focusing on shorter-duration bonds, particularly those with maturities of up to five years, to mitigate interest rate risk.
Investment-grade corporate bonds and floating-rate corporates are highlighted as attractive options, with the State Street SPDR Bloomberg Investment Grade Floating Rate ETF (FLRN) offering a 30-day SEC yield of 4.02%. Omar Aguilar from Schwab Asset Management favors the five- to seven-year segment of the curve, citing strong corporate fundamentals.
However, Leslie Falconio from UBS advises caution against making hasty investments, recommending a gradual approach to building positions in high-quality income assets