The strong march jobs report, issued Apr. 2, brought good news for the economy and bad news for bond owners. In the first two weeks of April the benchmark ten-year Treasury yield catapulted from 3.85% to 4.37%. That amounts to a price drop of 4.8%. The yield has inched up a bit more since. Some securities were hurt badly, others escaped with little harm―this time. The first half of April marks the initial leg of a new credit cycle. This downward cycle is driven by the prospect of higher rates ahead, always poison for fixed-income securities. It's useful to go through which securities have suffered the most and which ones are awaiting their turn. And since well-diversified investors should never bail out of fixed income completely, you should think about what instruments to buy that will do best in the next round of rate increases.
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