Expect interest rates to creep up in the second half of 2014 with the yield on the 10 year Treasury finishing the year around 3%, says Jeffery Elswick, Director of Fixed Income for Frost Investment Advisors. To prepare for yields drifting higher, Elswick says he is taking the duration down in his portfolio to keep interest rate risk light. Elswick says he is focused on the 7 year part of the curve when it comes to corporates and is underweight agency bonds until the Federal Reserve finishes tapering. Finally, Elswick is finding value and yield among commercial mortgage-backed bonds issued during the credit bubble.

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