Jane's construction company provides a pension to its loyal employees. To facilitate the pension payment, the company has invested in a portfolio of US treasury bonds, bills, and notes (various maturities from one year to 30 years). Jane hears on CNBC an expert discussion on the yield curve, where the experts are predicting the yield curve to invert (long term interest rates fall, while short term rates increase).

Assuming that Jane believes these experts, how should she re-balance her portfolio?

Option 1: Sell short term bonds (1-year maturity) and use the proceeds to buy long term bonds (30-year maturity)

Option 2: Sell long term bonds (30-year maturity) and use the proceeds to buy short term bonds (1-year maturity)

Explain your choice above