While the
slope of the yield curve today may point to more modest returns in future years, we believe the bull market still has room to run.
For example, it is often useful to view the short - end
of the yield curve as being primarily influenced by growth, with the long - end mostly reflecting inflation expectations.
And last week two widely followed economists openly debated each other on the reliability
of the yield curve in the current environment.
Active bond managers focused on the short end
of the yield curve did far better than their counterparts focused on equities and other pockets of the bond markets.
And I think you had that back then, and that was a period where you sustained that kind
of yield curve with a healthy economy.
While the slope
of the yield curve today may point to more modest returns in future years, we believe the bull market still has room to run.
There is no reason why their returns should be considered together, without a model
of yield curve spreads, corporate spreads, and equity financing spreads.
The global yield curve is a 12 - month moving average
of the yield curves of the 6 countries, each weighted by their GDP.
That said, my recent 2 - part series on the shape
of the yield curve suggested that the curve shape was the sort where we often get negative surprises.
The experts can agree neither on which way interest rates will go next nor on what the shape
of the yield curve means for interest rates in the future.
Also, I've mentioned previously that the long
end of the yield curve today is probably being influenced by international forces, as rates are lower overseas.
The important idea is that the relative performance of a barbell strategy will depend on how the shape
of the yield curve changes.
Operating at the short - end
of the yield curve doesn't do much good since those rates can't come down any further.
A
flattening of the yield curve means longer - term rates are falling in comparison to short - term rates, which could have implications for a recession.
Negative Feedback Loops «The
steepness of the yield curve holds a long - standing correlation with currency weakness,» a report by Bank of America Merrill Lynch global research says.
The spread between the two - year note yield and the 10 - year note yield, a widely - watched
measure of the yield curve, narrowed to 42.8 basis points, the tightest since September 2007.
Given the rising interest rate environment as a result of stronger economic growth, they believe that, in the current market, positioning the fund along the intermediate
portion of the yield curve provides investors less interest rate sensitivity than longer duration portfolios.
At their March meeting, Fed officials generally agreed that the current degree of
flatness of the yield curve was not unusual by historical standards,» according to the meeting minutes.
Fixed - income: Regardless of country or supra - national market, the fixed - income fund should have holdings throughout the entire
length of the yield curve (most available maturities), as well as being a mix of government, municipal (general obligation), corporate and high - yield bonds.
Phrases with «of the yield curve»