Many experts now believe bonds are riskier than stocks and warn of a bond bubble ready to burst. A better understanding of both the likelihood and impact of such a bubble would have clear implications for advisors, who must face two key questions: how much bond exposure clients should have, and whether it is prudent to shorten durations to soften the impact of rising rates.
A rate increase is widely expected: Despite media quips about QE Infinity, it is just not feasible for the Fed to continue buying its own intermediate- and long-term bonds forever.
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