Spencer Knickerbocker, chief investment officer at Stonebrook Private an Elevation Point partner firm, for one, is preparing for the possibility that interest rates will stay higher for longer. That’s because inflation remains persistent, and the Fed has signaled it’s not in a rush to cut. But what’s equally important and less talked about in his view is what’s happening on the long end of the Treasury curve.

“We’re seeing a surge in Treasury issuance at the same time that foreign demand is pulling back, and a weaker dollar is compounding the issue. That combination is putting upward pressure on long-term yields, even as the Fed debates cuts,” Knickerbocker said.

In terms of positioning portfolios in a “higher for longer” world, Knickerbocker maintains his approach is not to “outguess the Fed.” Instead, his fixed income strategy is anchored in laddered portfolios of high-quality, investment-grade bonds.

“This approach allows us to steadily reinvest across market cycles and right now, that means locking in yields north of 5% at the longer end of the ladder. It’s a compelling contrast to sitting in cash or short-duration bonds, where today’s yields could fade quickly once rate cuts begin,” Knickerbocker said.

Along similar lines, Bryan Bibbo, president & partner of JL Smith Holistic Wealth Management, has been modestly extended duration in core bond holdings to lock in more attractive yields, focusing on high-quality municipals and investment-grade corporates for both income and tax efficiency. For short-term needs, he’s been laddering Treasuries in the 6- month to 2-year range, giving clients flexibility and liquidity without leaving yield on the table.

“We continue to apply our bucketing strategy, organizing assets by time horizon and purpose, to bring clarity and confidence. The ‘now’ bucket provides near-term income, the ‘soon’ bucket – typically covering 5–10 years of income – holds high-quality fixed income or fixed annuities, and the ‘later’ bucket maintains long-term growth potential. This approach helps clients navigate volatility while staying anchored to their financial plan,” Bibbo said.

Bibbo added that tax efficiency is also top of mind. As a result, he said he is staying mindful of where income is generated and how it’s taxed pairing the right assets in the right accounts, using municipal bonds in taxable accounts, and optimizing withdrawals from IRAs, Roths, and brokerage accounts based on the client’s tax bracket.

All that said, Bibbo maintains he’s not ignoring the potential upside for his fixed income positions, even while planning for a prolonged high-rate environment.

“If the Fed does follow other global central banks and begins cutting rates, we could see meaningful appreciation on the longer-duration positions we’ve already begun to accumulate. This positioning helps us stay defensive yet opportunistic,” Bibbo said.