#rate-sensitive-investing

#rate-sensitive-investing

The Consumer Price Index jumped 3.3% in March, up from 2.4% annualized growth in February. The all-items index rose 0.9% month over month, marking the largest increase in nearly four years.

The Bank of Canada said it was holding its key interest rate at 2.25 per cent on Wednesday. The bank was widely expected to look past the high cost of energy brought on by the war in Iran and hold rates.

Monthly payouts in 2026 have run $0.102, $0.105, and $0.108, tracking close to the $0.1055 average seen across 2025. That is a meaningful step up from the $0.0865 average in 2024.

Firm Treasury yields could continue to weigh on the metal amid ongoing inflation concerns. Lingering tensions in the Strait of Hormuz could continue to push oil prices up, reinforcing inflation concerns and weighing on bullion.

Public sector net borrowing fell by £19.8 billion, or 13.1pc, to £132 billion over the 12 months to the end of March, the lowest level since 2022-23.

Markets could remain sensitive to the developments in the Middle East. Tensions remain elevated in the region amid continued incidents in the Strait of Hormuz and a failed attempt for a second round of talks this week, undermining prospects for a near-term resolution.

EMLC holds a broad mix of about 507 bonds issued by emerging market governments, all denominated in local currencies such as the Brazilian real, South African rand, Turkish lira, and Mexican peso. Almost the entire portfolio is sovereign debt at roughly 99 percent, so the fund is essentially a pure government credit exposure.

The iShares U.S. Treasury Bond ETF holds only U.S. Treasury notes and bonds across the maturity curve, providing the cleanest expression of flight-to-quality stability in a single ticker. Credit risk is effectively zero because every holding carries the full faith and credit of the U.S. government.

TLT holds U.S. Treasury bonds with remaining maturities greater than 20 years, collecting fixed semi-annual coupons that are passed through as monthly distributions.

SPTI holds U.S. Treasury securities in the intermediate maturity range, offering a 3.76% dividend yield and an expense ratio of just 0.03%, making it one of the cheapest ways to own Treasury income.

HYBL attempts to solve the income problem by combining senior loans, high-yield corporate bonds, and debt tranches from U.S. collateralized loan obligations (CLOs). The result is a portfolio with lower duration and lower volatility compared to traditional high-yield funds, while still targeting high current income with monthly distributions.

In my view, interest rates are more likely than not going to head lower over the course of 2026 and into 2027. I'm not saying we're due for a pandemic-like selloff, but I do think that weakness in the labor market is likely more protracted than the government data suggest. As such, I do think the makeup of the Federal Reserve, and which way many of its presidents and voting members lean (toward providing support for the labor market over battling inflation) could lead to much faster rate cuts than many think.

Crude oil breaking above the USD 100 threshold has revived inflation concerns, pushing US Treasury yields higher across the curve. However, Friday's labour market report revealed a significant deterioration in employment conditions, with the economy losing 92,000 jobs in February, its largest contraction in several months.