The third quarter was another volatile one for credit markets, with yields across the maturity spectrum falling as markets continue to price in a slowing economic environment. On the short end of the curve, the Federal Reserve cut interest rates twice this quarter, bringing the Fed Funds target range to 1.75-2.00%. The cut in July … Continue reading Yields Continue to Fall
Click here to download a PRINT VERSION of this article. At the end of March, the benchmark ten-year U.S. Treasury was yielding 2.41%. The second quarter saw yields on the ten-year Treasury fall by a remarkable 40 basis points (0.40%) to end the quarter at 2.01%. This is a historic drop in interest rates. Many … Continue reading Credit Markets: A Historic Quarter
Click here to download a PRINT VERSION of this article. After a volatile end to 2018, interest rates continued their move lower in the first quarter driven by a dramatic shift in U.S. Federal Reserve policy and overarching concerns around the health of the global economy. The benchmark ten-year U.S. Treasury, which hit a recent … Continue reading An About Face from the U.S. Federal Reserve
Bond markets in the fourth quarter experienced a significant amount of volatility as investors attempted to gauge the extent of further Federal Reserve tightening and the likelihood of an economic slowdown as we move into 2019. For the full year, the broad US bond market return was flat while yields vacillated dramatically in the final … Continue reading Credit Markets Showing Great Uncertainty
To download a printable version of this article: 201810 OPCM – Credit Markets, Another Rate Hike The third quarter saw yet another interest rate hike by the Federal Reserve. On September 26th, Fed Chairman Powell announced the Fed Funds target would increase another .25% to a range of 2.0-2.25% and officially removed the term “accommodative” … Continue reading Credit Markets: Another Rate Hike
The Federal Reserve raised interest rates again in June, marking the seventh rate hike since the Fed began its tightening campaign in late 2015. The Federal Funds rate now stands at 1.75-2.0%, with the Fed indicating they intend to raise rates two more times in 2018. Notably, Fed Chairman Jerome Powell stated that, beginning in … Continue reading Credit Markets: A More Transparent Fed
The fourth quarter brought greater clarity to the future of interest rates as the Federal Reserve began to shrink its huge $4.5 trillion balance sheet and followed through with a third interest rate hike for the year in December. The Fed also indicated they plan three more rate hikes in 2018 as economic growth improves … Continue reading Credit Markets: Is Inflation Finally Coming?
A headline in the June 25th edition of the Financial Times read “Investor Nervousness Rises as Yield Curve Flattens”. If you are a regular reader of the Wall Street Journal, Barron’s or other business periodicals, you have probably noticed a wave of articles with similar headlines of late. This sudden fixation with the yield curve … Continue reading Why Should I Care About the Yield Curve?
In the middle of June, the Federal Reserve increased short-term interest rates for the third time in 6 months, with the benchmark Fed Funds rate increasing to a target range of 1%-1.25%. Although expected, credit markets didn’t react the way the Fed had anticipated. There appears to be a growing conundrum amidst Fed Governors as … Continue reading Fixed Income: A Credit Conundrum
The investment landscape is full of confusing jargon, but one area that seems to baffle investors more than others is fixed income. In today’s interest rate environment, clients repeatedly ask questions relating to bond pricing. Specifically, clients ask why they pay a premium for bonds, and how this impacts the return on their investment. In … Continue reading The Premium Bond Conundrum
