As investors navigate the Federal Reserve's higher-for-longer interest rate policy — and eventual rate cuts down the road — they should make sure they have their fixed-income portfolio positioned properly, according to Wells Fargo. Federal Reserve Chair Jerome Powell reiterated Tuesday that inflation is falling more slowly than the central bank expected, which means the central bank will be on hold for an extended period.
That means investors should look at intermediate-term fixed income to capture most, if not all, of the yield of longer-dated securities, he wrote in his weekly commentary Wednesday. "Looking at 5-year out to 30-year maturities, the yields are nearly the same. We do not believe investors are getting paid for taking on the risk of longer maturities," Wren noted. The five-year Treasury , for instance, is yielding around 4.4% and the 30-year has a yield of about 4.5%.