What Bond Investors Should Do As Interest Rates March Higher

Flashing red lights and what to do about them…

At the time this is being written, Thursday morning March 31, 2022, U.S. bond market yields are flashing, FLASHING RED, in fact. A warning signal of sorts, attempting to alert all those who will pay attention, that either something is amiss or at a minimum that something is aberrant regarding the normal slope of the U.S. Treasury yield curve.

You see, the normally upward sloping yield curve is currently flat when looking at the 2 year & 10 year yields. Even inverted when looking at the 3yr, 5yr, and 7yr yields versus the 10 yr yield.

So there are two questions that investors who manage their own accounts have to ask themselves, “what does this all mean? And what, if anything, are they going to do about it?”

The attached article addresses some of these warning signals and possible steps that we at Conexus Capital Management, LLC have been focusing on and preparing for since the Fed began cutting the fed fund rates to nearly zero in March 2020.