Worried that rising rates are going to hurt some of the bonds you own? A 0.5% – 1% move would be plenty big to pancake many bonds.
As I write to you on this first Wednesday of December, traders are handicapping a 78% probability that the Fed will boost rates in two weeks. Overall they’re projecting a half-percent increase between now and June. And renowned government insider Goldman Sachs is a bit more aggressive – it’s projecting a full percentage point of tightening.
So if you’re worried that Goldman Sachs could be right, you’d better move some of your fixed-rate bond money into “floating-rate” issues.