With rates rising again, fixed-income investors may want to reconsider interest-rate hedged bond exchange traded fund strategies to diminish the negative effects of rate risk while still maintaining robust yield-generating opportunities.
Global bonds are selling off, driving yields to their highest level in over a month, as investors digested messages from central banks this week on rolling back easy monetary policies, reports Rachel Koning Beals for MarketWatch.
For instance, yields on benchmark 10-year Treasury notes have risen back to 2.267% from a recent low of 2.137%.
As more anticipate the European Central Bank to begin tightening its monetary policy, traders are shifting away from a heavy U.S. Treasury position to diversify with higher yields in foreign markets.
“The time is approaching when the [Federal Reserve] will no longer be the only major central bank in tightening mode,” foreign-exchange strategists at BNP Paribas SA said in a note.