Investors are increasingly focused on duration risk within the bond market. Duration measures how much a bond’s price is likely to fluctuate in response to interest rate changes. Bonds with longer durations are more sensitive to interest rate movements.

With expectations of potential interest rate hikes, the concern over duration risk has heightened. If interest rates rise, bond prices typically fall, and bonds with longer durations will experience a greater price decline.

Several factors contribute to this growing concern:

• Inflation: Persistent inflation can lead to central banks raising interest rates to cool down the economy.
• Central Bank Policy: Changes in monetary policy by central banks directly impact interest rates.
• Economic Growth: Strong economic growth can also lead to higher interest rates.

Investors are advised to carefully assess the duration of their bond portfolios and consider strategies to manage this risk, such as shortening duration or diversifying into other asset classes.

Investors are increasingly focused on duration risk within the bond market. Duration measures how much a bond’s price is likely to fluctuate in response to interest rate changes. Bonds with longer durations are more sensitive to interest rate movements.

With expectations of potential interest rate hikes, the concern over duration risk has heightened. If interest rates rise, bond prices typically fall, and bonds with longer durations will experience a greater price decline.

Several factors contribute to this growing concern:

• Inflation: Persistent inflation can lead to central banks raising interest rates to cool down the economy.
• Central Bank Policy: Changes in monetary policy by central banks directly impact interest rates.
• Economic Growth: Strong economic growth can also lead to higher interest rates.

Investors are advised to carefully assess the duration of their bond portfolios and consider strategies to manage this risk, such as shortening duration or diversifying into other asset classes.