While the shape of global yield curves is generally relegated to the purview of fixed income strategists and economists, many investors are now starting to take note of not only the level of interest rates but also their relative slope.
Without a doubt, the results of today’s Federal Open Market Committee (FOMC) meeting may be the most anticipated monetary policy gathering thus far in 2016. Indeed, given the back-and-forth “Fedspeak” over the last few weeks, the money and bond markets can be forgiven for having a bit more uncertainty this time around.
With the third quarter coming to a close in a few weeks, fixed income investors have had a lot to cheer about thus far in 2016. Indeed, essentially every major asset class has posted positive returns up to this point, with some groupings registering double-digit gains.
To casual market observers, a rationale for why U.S. interest rates would remain contained (despite tightening by the Fed) was simple: low rates around the world—especially in Europe and Japan, with negative rates—boost demand for higher-yielding U.S. bonds.