The value of discipline when it matters most

US Treasury yields are near 2007 levels, reflecting sustained growth and inflation. This presents an attractive entry point for dollar-cost averaging into fixed income, with the 10-year UST around 5%.

While rising rates have pressured bond prices, the article argues for their continued role in diversified portfolios. Fixed income provides income, liquidity, and diversification, acting as a stabilizing force. The current yield environment offers significantly more compensation than the ultra-low rates of the past decade.

The author favors the front end of the yield curve, specifically one- to three-year maturities, for their balance of yield and risk. Longer-duration bonds face headwinds from inflation and borrowing needs. Much of the market repricing for a "higher-for-longer" rate environment may have already occurred, but inflation and fiscal concerns remain key watchpoints.