Treasury Term Structures vs. Corporate Bonds: Comparative Analysis of Yield Curves, Risk Profiles & Portfolio Optimization Strategies for Investors
Treasury Term Structures vs. Corporate Bonds: Comparative Analysis of Yield Curves, Risk Profiles & Portfolio Optimization Strategies for Investors Key Takeaways Safety First : Treasury bonds are super safe (backed by the U.S. government), while corporate bonds carry more risk but offer higher potential returns . Yield Curve Insights : The shape of yield curves (like normal or inverted) tells you a lot about economic expectations and helps compare Treasury and corporate bond behavior . Diversification is Key : Mixing both types in your portfolio can balance risk and return, but Treasuries often provide better protection during stock market crashes . Watch Those Taxes : Treasury bond interest is usually state and local tax-free, whereas corporate bond interest is fully taxable, which can impact your net returns . Don’t Chase Yield Blindly : High-yield corporate bonds might look tempting, but they come with higher default risk and correlate more closely with stocks, reducing diversif...