Investors may want to focus on front end of yield curve — as Street anticipates next Fed meetings

• Short-term Treasurys offer yields north of 4% with relatively low risk, making them attractive in the current environment where markets expect a couple of Fed hikes over the next couple of years
• Wise favors U.S. credit markets (both investment grade and high yield) over European credit due to strong macro fundamentals
• Latin American emerging markets present additional opportunities with yields at double digits, offering attractive income potential in a diversified manner despite geopolitical risks

Summary

Key Investment Recommendation:

Noah Wise, head of global macro strategy at Allspring Global Investments, advises investors to focus on short-term Treasurys at the front end of the yield curve as part of a diversified portfolio strategy.

Main Strategy Points:

• Short-term Treasurys offer yields "north of 4%" with relatively low risk, considered attractive given the current monetary policy environment
• The market is pricing in "a couple of hikes" from the Federal Reserve over the next couple of years
• Recommendation comes ahead of Wednesday's Fed interest rate decision

Additional Opportunities:

Wise identifies several attractive investment areas:

• U.S. Credit Markets: Prefers U.S. investment grade and high-yield credit over European credit, citing strong macroeconomic fundamentals
• Emerging Markets: Particularly bullish on Latin American bonds, where yields reach double digits, offering significant income generation potential despite geopolitical risks

Market Context:

Allspring Global Investments specializes in fixed income, money markets, and equities, serving clients including consultants, financial advisors, corporations, and financial institutions.

Wise notes that recent market volatility has not altered his fundamental investment strategy. He views uncertainty as creating opportunities, specifically pointing to movements in short-term Treasury yields between Fed meetings. His firm has been tactically adjusting exposure to capitalize on this volatility.

Investment Philosophy:

The strategy emphasizes diversification across multiple asset classes and geographies while maintaining focus on yield generation and income opportunities in the current rate environment.