Yield Curve Strategies in a Steepening Environment

As a fixed income portfolio manager, understanding yield curve strategies is crucial for managing interest rate risk and enhancing portfolio returns. The yield curve illustrates the relationship between interest rates and different maturities of debt securities. In this context, consider the implications of a steepening yield curve on portfolio management.

Discuss the strategies a portfolio manager might employ in response to a steepening yield curve. In your answer, be sure to address both the potential benefits and risks associated with these strategies, and provide examples of specific actions a manager could take.