Interest Rates and Bond Market Insights

The discussion centers on how rising interest rates are affecting the bond market and the dynamics of investment strategies. Bonds are traditionally bought for income and capital preservation, but their performance has been inconsistent lately as returns have struggled since the market disruption two and a half years ago. Although some categories of bonds registered positive returns last year, the overall attractiveness of bonds compared to short-term yields raises questions about their value proposition. The evolving yield curve, which is starting to steepen, suggests a shift in market perceptions regarding inflation risks and expectations of Federal Reserve rate cuts in the near future.