With the economy said to be on a firmer footing this year, given stronger economic data and greater confidence, investors are anxious for improved returns in their investment portfolios. However, despite some positive economic news and the recent debate among Federal Reserve policy makers regarding when to begin tightening monetary policy, short-term rates dropped considerably this past month.
The challenge for investors is how to balance a desire to pick-up incremental yield, without over-extending duration. Although most factors currently driving down short-term rates will eventually reverse, we anticipate that rates will be depressed for the rest of the year.
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