The Federal Reserve embarked on the current tightening cycle just over a year ago. The Fed Funds rat...
The Federal Reserve embarked on the current tightening cycle just over a year ago. The Fed Funds rate bottomed at 1% and has headed gradually higher in 0.25% steps to its present level of 3%. During the same period the yield on the 30-year 'long bond' has fallen steadily from around 5.3% to 4.3%. When US interest rates started to rise from very low levels back in 1994, the outcome was very different. The first 2% rise in interest rates actually produced a 2% rise in 30-year bond yields. The question is, why have bonds behaved so much better in 2005 than in 1994? As far as we can see, t...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes