How to use an interest rate forecast in deciding upon a bond investment strategy

Abstract

Because of the inverse relationship between interest rates and bond prices, we have made an interest rate forecast to choose an investment strategy for bonds. In this forecast we find that the interest rate will make a drop in 2019 and then increase moderately in the time period up until 2049. We will therefore recommend a bond laddering investment approach for risk-averse investors, and a bond swapping approach for investors more open for taking on risk.