Your Survival Guy’s May RAGE Gauge is in, and with interest rates jumping, there’s some uneasiness in the air. That’s why my gauge is near full tilt. With the yield curve inverted, you can certainly sink your teeth into some short-term bonds, but like I’ve said before, don’t be in the interest rate prediction business. There are some juicy yields going out beyond five years over five percent that could do a lot of good for those on or soon to be on a fixed income. Don’t let the perfect get in the way of the good.
Take a look at my yield curve chart below, and you can see that yields for maturities along the entire curve are over 4.5%, with some shorter rates well above 5%. Those higher yields along the curve give retirees a lot of flexibility they haven’t had in the last 15 years or so.
Since mid-2022, corporate bonds have also been offering investors yields they haven’t seen since the first decade of this century. Today, the Bank of America Merrill Lynch (BofAML) index of 5-7-year investment grade corporate bonds yields 5.5%. From the last trading day of 2010 to the last trading day of 2021, the average yield on this corporate bond index was 3.1%. Eleven years could be a good chunk of a retirement for some investors. Going without a decent return on corporate bonds all those years could make life hard.
Action Line: When you want to talk about risk and what it means for your portfolio, I’m here. In the meantime, click here to subscribe to my monthly RAGE Gauge alert.
E.J. Smith - Your Survival Guy
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