This post includes themes from the upcoming Q1 2026 Forisk Research Quarterly and the (virtual) Applied Forest Finance course on March 31^st, 2026. Early registration ends March 17^th*

Investors have options when allocating capital to the forest industry. Examples include acquiring timberlands or mills, buying shares in a public timberland-owning company, providing financing for a new wood-using plant or technology, or waiting for opportunistic transactions. Ultimately, investments must meet objectives, which get benchmarked to metrics such as cash flow, value appreciation, or returns relative to the S&P 500 or U.S. Treasuries.

Yes, Investors Care About Bond Markets

In talking with forest industry clients and timberland investors, we hear a mix of pessimism and frustration for 2026. Many firms have capital and want to invest in 2026, “but” to quote one C-suite executive, “the rules of the road keep changing.” Meanwhile, expectations for 2027 and beyond vary from optimistic to “wait and see.”

For institutional investors tasked with managing portfolios on behalf of current and future retirees, the U.S. policy and trade environment generates questions related to broader strategies as well as specific asset classes. As one investment executive shared,

“Our fund managers are asking, ‘before we talk about timberland, what about Treasuries? Do we still want to hold a lot of them? Are they still low risk?’”

This broader, portfolio-level view reminds us about opportunity costs, and how investors always compare the placing of capital into forests or mills to their next best alternative. The bond market provides one way to assess the overall thinking related to risk and return in a systematic way.

Revisiting the Yield Curve

Treasury yields refer to the amount of money earned on U.S. Treasury bills, notes or bonds sold by the Treasury Department. We care about yields because when they increase, so do rates on mortgages and business loans. Typically, the government offers higher yields for longer maturities to compensate investors for locking up their capital for more time. Analysts look for upward sloping yield curves, where long-term yields exceed short-term yields. For example, as of January 30, 2026, one-year Treasuries yielded 3.48% while 30-year Treasuries yielded 4.87%.

Recent rate cuts by the Federal Reserve helped lower these shorter-term yields, like those for 1-year and 2-year Treasuries. Meanwhile, persistent, higher long-term rates imply broader concerns about inflation and high debt loads. For bond investors, the nightmare scenario is one where creditors – whether firms or countries – default or an economy where high rates of inflation devalue the future worth of their bond portfolios and coupon payments. Fortunately, the current yield curve is relatively normal and not setting off alarm bells.

Bonds and Timberlands

Long-term sentiments for U.S. Treasuries affect investor expectations for timberlands. When bonds pay four or five percent, that can become a useful benchmark or minimum expectation for harvesting timber and holding land. And while periods of lower economic growth or higher geopolitical uncertainty can slow traditional investment activity, they also raise the profile and attractiveness of cash flowing, value preserving assets and facilities in high quality wood baskets and timber markets.

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*Class participants receive two updated books on Forest Finance

Forisk Finance Simplified, 7^th Edition

This book distills forest finance themes into a question-and-answer format for those who want an accessible reference for analyzing timber investments and making forest management decisions. The new 7th Edition includes additional content on selecting financial criteria, benchmarking timberland investments, and evaluating financial statements.

Why read Forest Finance Simplified? (19 second video)

Aunt Fanny Learns Forestry: Managing Timberland as an Investment

This 2^nd Edition, with drawings by taxidermist Max Lang and a cover by Heather Clark, follows Aunt Fanny as she gets to know her recently inherited forest, learns investment concepts, and implements a forest management plan. The book serves any investor interested in a tight and entertaining tutorial for prioritizing what matters when managing their timber as an investment.