(FORTUNE Magazine) – ATTENTION, please, fixed-income passengers: We'd like to apologize for the recent interest-rate turbulence. As you may have noticed, that last air pocket knocked down yields on 30-year Treasuries to below 6.9%, their lowest level in a generation. We're sorry for any discomfort this may have caused. Please fasten your seat belts for volatility too: As Captain Clinton's economic plan gets cajoled, squeezed, and shoved through Congress, expect rates to be buffeted by every gust of the political winds. What, then, should a would-be highflying bond buyer do? For starters, don't despair over that volatility. Make use of any price swings to buy what you want on the cheap. And don't get sullen at the disappearance of lofty yields, because you don't need them to prosper. With economists predicting low inflation and slow growth, virtually all signals are go for the bond market. Here is a rundown of the major sectors.

-- TREASURIES. Look hard at the Treasury market's extra-steep yield curve, because you may be surprised at how much extra yield you can pick up by extending maturities just a few years. The sweet spot is in Treasury notes with maturities of seven to ten years, says money manager Randall Merk of the Benham Group in Mountain View, California. Why? A three-year Treasury note recently yielded 4.35%, only 63% as much as a 30-year bond. But the seven-year note was yielding 5.67% -- fully 82% of the 30-year bond. That's a hefty increase for four years' extra maturity, if you can afford to tie money up that long. Meanwhile, the seven-year note has only half the volatility of the long bond.

-- MORTGAGE-BACKEDS. Ginnie Maes with expected maturities of seven to ten years boast yields as high as 1.25 percentage points above comparable Treasuries. But beware of prepayment risk. When interest rates fall, homeowners refinance their mortgages, returning principal to mortgage-backed holders at the worst possible time. Smith Barney analyst Linda Lowell likes recent Ginnie Maes with 7.5% coupons, yielding just under 7%. Because few home buyers refinance in their first two years of ownership, holders of these new securities face less prepayment risk.

-- HIGH-GRADE CORPORATES. The best buys in corporates are in the five-year to seven-year range, says Theodore Giuliano of Neuberger & Berman in New York. He recommends bonds from industrial companies that stand to benefit most from the economy's recovery. Such bonds typically yield around 7%. Medium-term notes from banks and insurance companies are also on his buy list: Their yield compared with Treasuries of similar duration is higher by a hefty 0.50 to 0.75 of a percentage point.

-- JUNK. The extra risk you take by buying low-quality debt can mean yields of 10% to 12%. That's slightly below last year's yields. Still, observes Kenneth B. Funsten, a portfolio manager at Wertheim Schroder's Beverly Hills office: ''To get paid 10% in a 5% world means high-yield research is time well spent.''

-- MUNICIPALS. The threat of higher taxes has already triggered a flight to munis. Result: Prices have been bid up and yields down. Yield-hungry investors may feel pressured to snap up lower-quality issues. Don't, warns William H. Reeves, municipal portfolio manager for Putnam Investments in Boston: ''This is not the time to panic buy.'' He suggests high-rated general obligations or bonds for essential projects, with maturities of ten to 12 years. Both categories yield around 5%. Even at lower yields, munis still make a compelling investment for high earners and people in high-tax states. A Californian in the top income bracket would have to find a taxable bond yielding 8.75% to equal the taxable equivalent yield of a local muni. That's before the Clinton tax bite: If the new 39.6% top tax rate becomes law, the California muni's taxable equivalent yield would climb to 9.5%.

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCES: THE BOND BUYER, FEDERAL RESERVE, SALOMON BROTHERS CAPTION: A SWOON IN YIELDS