By Sage Advisory

1. The U.S. economy continues to show strong growth, and the Fed has indicated two additional rate hikes in 2018. As a result, short-term interest rate will continue to rise.

Short Term Interest

2. Trade uncertainty should keep a lid on longer-term rates, which means the yield curve should continue to flatten.

Yield Curve

3. Short-term bonds have attractive yields with a lower level of interest rate risk. Given the flattening of the yield curve, short-term bond yields are at their highest since 2009, which presents value for investors as they can bear less interest rate risk while earning attractive carry.

Short Vs Intermediate Bond Yields