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Your Bonds May Be Letting You Down, But Don't Go 'Chasing Yield'

Thursday, May 1, 2014 - 6:57 AM
Yields on long-term bonds have continued to fall this year while short-term yields have held pretty steady. That’s what experts call a "flattening of the yield curve",  and it signals poor bond returns coming. Long-term bonds pay higher yields because investors tie their money up longer, taking on greater risks. When the curve gets flatter, that risk premium gets smaller. Long-term bonds pay higher yields because investors tie their money up longer, taking on greater risks. When the curve gets flatter, that risk premium gets smaller. So what’s a bond investor to do?

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