Ten-Year Trouble

There is trouble on the horizon, and more might be brewing . . .

. . . at least according to the Fed.

Last week, the Federal Reserve raised interest rates one-quarter percent in an attempt to combat runaway inflation.

The result? Interest rates on the bellwether 10-year Treasury bond jumped through the roof.

Yesterday, Federal Reserve Chairman Jerome Powell hinted that the Federal Reserve is prepared to act more aggressively (in half percentage point increments) in the months ahead to bring inflation down to its 2% long-term target.

For the past quarter-century, (when I first created The Coffeehouse Investor), I emphasized the importance of diversification in common stocks.

With interest rates rising so dramatically, now is the time to educate yourself on the importance of diversification in the bond component of your portfolio.

Minqzhe Yi, analyst at Dimensional Fund Advisors presents a thoughtful article on this timely subject.

Read it and then reflect on your bond portfolio. Don’t let rising interest rates create chaos for you.  
   
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