invhelpme wrote:. . . . We all know interest rates will be rising sometime (no one knows when) but wonder if our duration of about 5.4 is too risky in a rising rate environment. Is anyone out there in the same situation? . . .
We are all in this situation. However, I'm optimistic that U.S. interest rates will remain low for a long time. Here's why: The U.S. government can't afford
rising interest rates. Interest expense is a cost in the federal budget just like any other, but it's HUGE. As politicians bicker about raising revenues and cutting costs to balance the federal budget, there's one cost almost all enlightened federal congressmen will agree on: Keep Interest Rates Low
. It would be a disaster to the government if interest rates rose a few points because they'd have to make up the difference with additional revenues and/or cutting other real costs. Okay, maybe I'm pessimistic instead of optimistic, and I don't invest entirely on my foresight, but this I do believe.