Yield Curve Strategy Recommendations for Fixed Income Portfolio

ABC Investment Management is currently evaluating various fixed income portfolio strategies in light of an evolving economic landscape characterized by interest rate fluctuations and changes in inflation expectations. The firm aims to construct a portfolio that maximizes returns while managing the interest rate risk associated with different segments of the yield curve.

As a portfolio manager, you are tasked with devising a yield curve strategy that could be suitable for this context. Consider factors such as the current economic indicators, the slope of the yield curve, anticipated changes in interest rates, and the duration profiles of existing bonds in the portfolio.

In your essay, outline a specific yield curve strategy that ABC Investment Management could implement, explaining the reasoning behind your choice, the potential risks involved, and how this strategy might be adjusted if the economic environment changes. Ensure to demonstrate a comprehensive understanding of yield curve strategies and apply relevant fixed income principles.