Why the Barbell Strategy Is Gaining Traction in Today’s Market

July 23, 2025

By Jonathan Jackson, CFA, FRM Manager of Brokerage Services, Catalyst

Navigating the current rate environment requires more than defensive positioning – it demands strategic agility. For credit unions aiming to capture opportunity while preserving flexibility, the barbell investment strategy is emerging as a smart, time-tested approach.

Rather than trying to outguess the next Fed move or inflation print, a barbell portfolio accepts that short-term rate moves are unpredictable – and uses that to your advantage. By allocating investments to both short and long ends of the yield curve, credit unions can maintain liquidity, lock in longer-term yields, and manage risk more precisely.

How It Works – and why it matters now

Short-term investments – such as Treasury bills, floating-rate notes, and cash— serve as a liquidity engine. They allow credit unions to stay nimble, reinvest frequently, and remain ready to support loan growth or manage outflows.

Longer-term assets, like agency CMBS, Treasury notes, or agency bullets, offer a chance to lock in yield and build income stability – particularly valuable if interest rates decline faster than expected.

What the barbell avoids is equally important: intermediate-term bonds that often don’t offer meaningful yield pickup but still carry rate sensitivity. Instead, the strategy concentrates on clarity – clear cash flow on the short end, and clear income on the long end.

Key Benefits for credit unions

•  Liquidity without compromise: The short end keeps you responsive to market changes and funding needs.
• Yield with duration control: The long end helps you guard against falling rates while supporting earnings.
•  Flexibility for evolving conditions: Whether the Fed cuts, holds, or hikes again, a barbell gives you options.
• A tailored fit: With Catalyst, your barbell structure is built around your credit union’s unique liquidity profile, rate outlook, and earnings goals.

Built for a market in motion

While no one can predict exactly where rates are heading, you can build a strategy that’s ready for multiple scenarios. A well-structured barbell portfolio doesn’t just weather uncertainty — it puts it to work for you.

Catalyst’s investment experts can help you evaluate your portfolio and design a structure that aligns with your goals. Contact your GoWest Solutions team to learn more about how Catalyst can help your credit union with innovative payments, asset management, and liquidity solutions.

Posted in GoWest Solutions, Top Headlines.