Core Insights - The article discusses three key issues in the fixed income market: yields returning to historically normal levels, the fleeting nature of chasing duration, and the expectation of a steepening yield curve in 2026 [2][8] Fixed Income Market Dynamics - Yields are expected to return to historically normal levels, impacting investment strategies [2] - Chasing duration has proven to be a temporary strategy, suggesting a need for caution in long-duration bonds [2][8] - The yield curve is anticipated to steepen, which may influence investment decisions [2][9] Horizon Analysis - A horizon analysis was conducted to assess the impact of interest rate changes on a fixed income portfolio, showing that while short-term maturities yield positive returns, longer maturities may underperform [3][7] - The analysis kept T-bill and short-term UST yields unchanged while increasing yields for longer maturities, resulting in a visibly steepening yield curve [7] Investment Recommendations - The analysis suggests avoiding extending duration and favoring ultra-short options like Treasury Floating Rates, which may provide better returns in a steepening yield curve environment [8] - Investors are encouraged to consider ultra-short to intermediate-term maturities for potential positive returns, while being cautious of longer-dated bonds due to rising back-end yields [8][9]