Fixed Income Q2 2023

As the Fed maintains its stance on higher interest rates, the short end of the fixed income yield curve has adjusted to reflect this likelihood.  After a prolonged period of bond yields hovering between zero and one percent, we now have the opportunity to invest in high-quality bonds with short maturities that yield above five percent.  If inflation falls, as we anticipate, these bonds will become more appealing in “real” terms.  Yields on our cash liquidity program (CLP) have also increased; the CLP concluded the quarter at 4.75% and will continue to rise in step with the federal funds rate.  We are also purchasing bonds across client portfolios to take advantage of higher rates.

It is worth noting that the yield curve remains inverted, indicating that investors are speculating on a potential interest rate cut by the Fed, possibly as early as early next year. From our perspective, “locking in” yields between 5-6% for high-quality bonds looks attractive. Given the overall strength of corporate balance sheets, credit risk for investment grade bonds is relatively low, and municipal issuers are generally in good financial standing given the fiscal spending from the Inflation Reduction and CHIPS & Science Acts.  Even if the economy weakens further, we do not foresee significant credit or interest rate risk associated with short- and intermediate-term bonds.

More Insights

Economic & Market Commentary

Research Q2 2025

Our Investment Committee remains diligently focused on researching the companies held in client portfolios and searching for attractive new investment ideas. Over the last twelve months, the Investment Committee has met with over 30 companies across 9 different sectors (see list below) to discuss key topics such as industry trends, competitive positioning, financial stability, and much more.
Read more

Economic & Market Commentary

Fixed Income Q2 2025

We believe the Fed will cut rates this year.  They are likely to start slowly with a quarter percentage point cut, bringing the policy rate closer to 4%, and will likely guide the market to expect at least one additional cut later this year. 
Read more

Up Next

Insights

Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Please note: Howland Capital does not use WhatsApp, Telegram, or similar messaging platforms to communicate with clients. Any messages you may receive through these channels claiming to be from us are unauthorized. For your safety, we encourage you to disregard such communications and reach out to us directly if you have any concerns.