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An intermediate-term bond opportunity?

5/2/2023

Intermediate-term bonds have outperformed short-term bonds after the end of past rate-hike cycles.

Intermediate-term bonds have outperformed short-term bonds after the end of past rate-hike cycles.

Key takeaways:

  • We think U.S. interest rates may be at or near their peak for the current cycle. For bond investors, this means yields on intermediate- and long-term bonds may continue to trend lower from mid-April levels.
  • In past cycles when interest rates have hit their peak, returns on intermediate-term bonds have generally outpaced short-term bond returns over the subsequent 12 months.
  • With these historical results in mind, we continue to believe that bond investors could potentially be well served by lengthening the durations of their fixed income allocations.

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