Fixed Income Strategies as U.S.-Iran Volatility Wanes

• Longer-term Treasury yields are expected to stay elevated due to Fed policy, inflation expectations, and the term premium.
• Higher oil prices, influenced by geopolitical events like the Iran war, are contributing to inflation expectations and filtering into various costs (e.g., plastic, shipping).
• The Federal Reserve is likely to remain on hold for the next few meetings, adopting a 'wait and see' approach given a stable labor market and persistent inflation concerns.
• Investors are advised to be cautious about taking on significant credit risk due to relatively tight spreads, but an intermediate-term duration ladder strategy can be appropriate for income generation.

Cooper Howard discusses fixed income strategies amidst geopolitical uncertainty and Fed policy. He anticipates longer-term Treasury yields will remain elevated, offering income opportunities for investors, but advises caution regarding credit risk. The Federal Reserve is expected to maintain its current policy stance for the foreseeable future.