IR+M: Is it Time Yet? For investors looking to add some yield at better levels


“… It may be time to nibble at the much higher rates available on short-term products – while 2-year Treasuries are up 194bps this year to 2.67%, 1-3 year Corporates are up 231bps to 3.43%.  Other sectors of the market have seen similar increases in yields.  The yield on the Agg is 172bps higher to 3.48%, while Long Corporates are 163bps higher to 4.73%.  With the relatively limited recent drawdown in equities, the huge runup in recent years, and the rise in discount rates, we expect that improved funded status will cause many pension plans to rebalance in favor of bonds.  Likewise, rates have moved higher in the US relative to many foreign markets, and though the move in the dollar has increased hedging costs, our bonds are still attractive to foreign buyers, supporting demand.  Buyers will begin to emerge at more attractive rates.”

Link: Is It Time Yet? – Income Research + Management