The U.S. fiscal policy has recently driven up the dollar, and it is now anticipated that the trend will shift back toward a decline. The policy‑rate hike announced in early 2024 has caused short‑term rises in Treasury yields, but long‑term volatility is still expected to remain low. In this environment, investors are looking for a strategy focused on low‑coupon bonds with maturities of about three to five years.
The core idea of the strategy is that “by concentrating on low‑coupon, longer‑maturity bonds, you can maximise yields.” This is an attempt to extract high returns from U.S. Treasuries when long‑term rates are adjusted downward. Because the rise in benchmark rates in early 2024 reflects the general direction of monetary policy, investors respond by heavily buying bonds with three‑to‑five‑year maturities. The strategy places more emphasis on long‑term stability and yield predictability than short‑term return volatility.
From this perspective, Lee Myoung‑seok (Team Leader at Korea Investment Securities PB Center) said that the U.S. Treasury market “is currently oscillating between a rise in yields and a decline.” He added that “by purchasing low‑coupon long‑maturity bonds, you can lower portfolio volatility while securing long‑term returns.”
He also noted that “when the U.S. fiscal policy adjusts rates at clear times, it simultaneously gives investors tangible value in terms of yield predictability.”
According to reports, 3–5 year Treasury bonds are currently at relatively low yields but still possess latent ability to generate long‑term returns. Thus investors intend to manage market volatility through these strategic positions while maximizing yields. The impact on the financial markets is difficult to forecast precisely, yet long‑term yields and stability remain attractive to investors.