This will be another roller coaster year for bonds, but one that could provide plenty of opportunities to lock in at much higher-than-expected rates. In fact, as the income analyst at Personal Finance, I’m getting jazzed about what might make great best bond investments in 2017, which I will share in upcoming issues.

I believe that bond markets are going to overreact to any number of factors, which will provide great income opportunities. One of those is Trump’s growth and stimulus policies that have been pushing up rates— in fact, 10-year Treasuries have been topping 2.5% as a result. And some forecasters are saying 10-year Treasury rates may go much higher, perhaps reaching 3.5% by the end of the year.

These forecasters believe there is the possibility that the bond vigilantes will come out and push rates higher if they believe that Trump’s growth policies are too inflationary.

Bond vigilantes are bond market investors who protest monetary or fiscal policies they consider inflationary by selling bonds, thus increasing yields. In the bond market, prices move inversely to yields. And it’s expected that these vigilantes will exert pressure, at least throughout most of the year.

This will present opportunities to buy high-yielding bonds, but it will also present risks. Bond investors will have to be nimble in locking in returns, as there is any number of issues that could put the brakes on rate hikes.

Also, now is a good time to think about what percent of your portfolio should be in bonds, since we’re entering into a new era of rising rates. For mutual fund company Vanguard, a diversified portfolio is 60% equities and 40% bonds.   

At Personal Finance, we presently have had a much smaller allocation to bonds (10%) precisely because of low rates, but that is all going to be changing. We’re going to be developing new bond portfolios that consider various risk tolerances, and help investors make the most of this braver, sexier world of bonds.

I’ll be intensely scrutinizing the bond market for great yield deals, and will be making recommendations in Personal Finance.