According to CNBC, rising rates and bond market volatility are creating select opportunities for income investors as Treasury yields climbed on Thursday to levels not seen since 2007 on the benchmark 10-year note and since 2004 on the 30-year bond. The 10-year Treasury was last yielding 5.179%, while the 30-year Treasury yielded 5.469%. The Federal Reserve raised rates by a quarter percentage point last week, and the market is pricing in about a 70% chance of another increase at the central bank's October meeting, according to the CME Group's FedWatch tool.

Rebecca Venter, senior fixed income client portfolio manager at Vanguard, said the higher-yield backdrop improves starting income for investors and makes future returns more balanced. She said shorter-duration bonds, including those up to about five years, can help limit interest-rate risk, while Treasury bills and investment-grade corporate bonds offer a mix of safety and yield. Michael Arone, chief investment strategist at State Street Investment Management, said floating-rate corporates in the one- to three-year range are attractive because their rates reset periodically. The State Street SPDR Bloomberg Investment Grade Floating Rate ETF (FLRN) has a 30-day SEC yield of 4.02% and a 0.15% expense ratio.

Arone also said floating-rate bank loans can offer yields above 7% in some cases. Omar Aguilar, CEO and chief investment officer at Schwab Asset Management, said the five- to seven-year part of the curve is the sweet spot and favors investment-grade corporates. Leslie Falconio, head of taxable fixed income strategy in UBS Americas' chief investment office, also favors the five- to seven-year range for credit assets and recommends building positions gradually rather than all at once.