BND - Inflation And Rising Interest Rates: Short Duration MBS Can Be A Safe Harbor

• The Fed plans to raise overnight interest rates at least four times in 2022. And will stop buying $120 billion per month of mortgage-backed securities (MBS) and Treasuries.
• This pending removal of Fed stimulus has caused interest rates to move dramatically higher and driven substantial losses in most bond and stock funds.
• Where can you hide? High-quality short maturity bonds provide a safe harbor. But beware! Bonds with longer maturities or credit risk leave you exposed to losses.
• A separately managed account (SMA) of short-term government agency MBS is always a safe harbor and a great source of safe stable income.
• You can now target 2.00% to 3.00% with super safe guaranteed mortgage-backed securities. These bonds should do fine in the face of rising rates and volatility.

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