One must wonder if the Federal Reserve is deliberately trying to mislead fixed income managers. It certainly seems that way. In 2022, when inflation warning signs were flashing everywhere, the committee maintained their expansionary, zero percent interest rate policy. Their response to the alarming pace of inflation was that it would prove transitory, and that inflation would soon return to the sub-2% trend. The fixed income community, believing the Fed possessed superior knowledge, extended duration to lock in the higher interest rates of the then upwardly sloping yield curve. After months of insisting that that the rise in inflation was transitory, the Committee realized that they had been wrong, and inflation was becoming entrenched in the minds of consumers. Upon that realization, the committee reacted by raising the overnight interest rate 500 basis points over the subsequent 16 months, causing the economy to wobble, and grinding the housing market to a near halt. That sharp move higher in the overnight rate pulled the entire yield curve higher as well, resulting in sharp losses to intermediate fixed income investors.