The surge in interest rates this year, especially at the short end of the yield curve, has given income investors an attractive place to put their money as stocks have dropped and inflation has put a premium on larger payouts. That has created a large appetite for short-duration ETFs, which allow investors to more easily access what has become the most lucrative part of the bond market. Several of the funds are raking in cash from investors.
The faster and more forceful the pace of Fed rate hikes, the higher the risk of recession and the more likely the yield curve will invert further," Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research, wrote last week . An inverted yield curve refers to short-term yields that are higher than longer-dated yields. For example, the one-year Treasury bill yielded almost 4% on Friday against 3.45% for a 10-year Treasury note.