Yield Curve Strategies for a Flattening Yield Curve

In the current economic climate, characterized by a flattening yield curve, a portfolio manager at a fixed income investment firm is evaluating strategies to enhance portfolio returns while managing interest rate risk. The manager believes that the current yield curve environment presents several potential opportunities to optimize the fixed income portfolio. In this context, discuss two yield curve strategies that the manager could implement. For each strategy, outline its rationale, the risks associated with it, and how it could be effectively integrated into the existing portfolio. Additionally, provide a brief analysis of how these strategies align with the manager’s objectives in managing interest rate risk.