With the Fed indicating that further rate hikes might be in the offing before the end of the year, it might be time for income investors to begin positioning their portfolios accordingly. The Fed futures market is still indicating a roughly 50-50 chance of a rate hike before the end of the year, but interest rates have already slowly ticked up over the past couple of months. The 10-year Treasury hit a near-term bottom of around 1.35% in early July, but currently sits about 20 basis points above that level.
The price/yield relationship of bonds is well known, so investors reaching into longer-term bonds and Treasuries for yield should start thinking about defensive strategies to protect themselves from rising rates. The path to higher rates will likely be slow and deliberate, so an aggressive move to the short end of the curve probably isn't the best strategy, but investors will… Read More …