Clients of $41 billion (assets) Cutwater Asset Management have one big worry these days: how to buy bonds without getting burned by inflation. With ten-year Trea-surys now yielding below 3%, they're right to be worried, says Clifford Corso, chief executive of Cutwater, an Armonk, NY. fixed-income manager. If inflation drives rates to 5%, the market value of those bonds should fall 15%. Meanwhile, inflation will erode the purchasing power of the bonds' principal.
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