In the US, the 2-Year/10-Year curve is still unusually flat when looked at from a historic perspective. This is despite the fact that we would expect to see that curve steepening in a rate-cutting cycle. To me, this underscores the unique attractions of short-dated bonds at this point in time.
Where active bond investors can find the sweet spot between risk and reward
So, while these are supportive conditions for active bond investors, these are also uncertain times. These are perhaps not the conditions in which to blindly take on interest-rate risk. Instead, it may be good time to look at the short end of the curve to find the sweet spot between risk and reward.
Liam O’Donnell, Fund Manager and Rates and Macro Expert, Artemis
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