In our January 2021 insight, “Short Duration and Income in the Face of Rising Inflation Risks in 2021,” we suggested that the market was too complacent on the risk of increasing inflation expectations and that rising rates could catch longer-duration investors off guard. In this update, we go into more detail on the impact of a steepening yield curve on various fixed-income allocations, then address the question: “How steep can the yield curve go?"
Important Risks: Investing involves risk, including the possible loss of principal. Fixed income security risks include credit, liquidity, call, duration, event and interest-rate risk. As interest rates rise, bond prices generally fall. • Loans can be difficult to value and less liquid than other types of debt instruments; they are also subject to nonpayment, collateral, bankruptcy, default, extension, prepayment, and insolvency risks.