Investors Flee Long-Term Bonds, Seek Shelter in Shorter Treasuries Amid Recession Fears

Bond investors are favoring shorter-dated Treasuries (1-5 years) as protection against this year's rout and potential recession.

Longer-dated Treasuries have been hammered as the Fed is expected to keep rates higher for longer to combat inflation.

Shorter maturities are more attractive as the economy may slow next year and the Fed nears the end of tightening.

Forces like high inflation and heavy Treasury issuance have steepened the yield curve by lifting long-term yields.

T-bills are starting to offer value with the Fed potentially nearing its peak rate; some investors are extending to 1-3 years.