2 min readExecutive Summary Compared to past periods, the yield curve inversion we are experiencing is quite benign. Therefore, there need not be profound concerns that an economic recession will automatically derive from this phenomenon. After the Fed funds rate reaches its peak in the coming spring-summer timeframe, one can expect the shape of the yield curve…
2 min readThere are several portfolio management techniques available to help diminish the risk presented by higher interest rates. If fact, when managing portfolio duration, yield curve positioning and security selection properly, rising interest rates can add value, particularly for short duration or held-to-maturity portfolios. Duration Management Though it is extremely difficult to predict with precision how…
1 min readWhat are Treasury Inflation-Protected Securities? Treasury Inflation Protected Securities (TIPS), are inflation-indexed government bonds whose principal amount is adjusted periodically for inflation. A fixed interest rate is paid semi-annually on the adjusted amount. They may also be referred as Treasury Inflation-indexed Securities (TIIS). Overview of the TIPS Market Established in 1997 by the US Treasury,…
2 min readExecutive Summary A portfolio of laddered maturities may have better yield advantage over money market funds in a rising rate environment. Market Cycle Comparison Since 1993, the average net-of-fees yield advantage of 1-year A-rated corporate bonds over the Lipper institutional Money Market Average was 86 basis points annually. In the rising rate environment of 1994,…