Bond Ladders in a Rising Rate Environment

Posted by Chad R. O'Connell AIF

Mar 23, 2017 3:57:36 PM

With a glut of information from the financial media, many investors have heard the drumbeat of rising interest rates. Market pundits are predicting higher rates due to rising inflation expectations coupled with an economy that is slowly picking up steam. The Federal Reserve has given more credence to the pundits by increasing the Federal Funds Target Rate twice in its past three meetings, causing investors to ask, “Will my bond ladder protect me in a rising rate environment?”

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Topics: interest rates, bond ladder

Changes in Bond Yields: How Is Your Portfolio Affected?

Posted by The Dopkins Wealth Team

Jul 9, 2015 2:19:55 PM

The recent increase in bond yields and the likelihood that the Federal Reserve will begin raising its target rate later this year have elevated investor concerns. Many investors are wondering if this is the beginning of a continued increase in yields and, if so, how it will affect their bond portfolios. From the end of January, the benchmark 10-year Treasury rate increased from a low of 1.64 percent to 2.37 percent in mid-June. While this rate is still low from a historical perspective, it is a fairly large increase for a short time frame.

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Topics: interest rates, yield curve, Federal Open Market Committee, bond yields, bond returns, (FOMC)

What is fixed income duration and why is it important?

Posted by The Dopkins Wealth Team

Jun 16, 2015 12:05:40 PM

Fixed income investors know there is an inverse relationship between interest rates and the price of fixed-income securities. When interest rates rise, prices fall. When rates decline, prices increase. There are a number of risk measures available to give investors a feel for how a specific bond or portfolio of bonds may change in value given a change in interest rates. The best way, though, to measure price sensitivity is to use duration, of which there are multiple types.

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Topics: fixed income, fixed income duration, modified duration, effective duration, interest rates

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