The Federal Reserve (Fed) is almost certainly going to raise interest rates in December, but what’s less certain is what comes after that – will 2019 see three rate increases or four?
Comments Off on Rate volatility underscores merit of a “boring bond fund”
The U.S. Federal Open Market committee (Fed) hiked the federal funds rate by a quarter percentage point at Wednesdays meeting. This is the third rate hike this year, putting the new target range at 2.00%-2.25%. The market had fully priced in today’s move well ahead of the meeting.
Comments Off on Fed continues gradual hikes
The U.S. Federal Open Market committee (Fed) continued their recent gradual hiking cycle by increasing the federal funds rate by 0.25 percentage points at today’s meeting. The target range after the hike is now 1.75%-2.00%. The financial markets had been fully expecting today’s move.
Comments Off on Federal Reserve hikes with upbeat outlook
The Federal Reserve (Fed) raised interest rates by a quarter of a percentage point as expected on Wednesday and signaled two more rate hikes for 2018. It also released its Summary of Economic Projections (SEP) for the next few years, which suggests that the Fed is optimistic regarding the future performance of the U.S. economy.
Comments Off on The Fed stays the course under its new leader
Employment growth has been strong enough that the Bank of Canada (BOC) hiked its overnight target rate to 1.25% in January.1 The BOC statement attempted to balance the view that growth was near capacity with concerns that raising rates too quickly could cause the economic expansion to stall. The 10-year yield has broken through its previous peak of 2.15% on the growth story and a modest pickup in inflation.2 We believe yields should continue to move higher from these levels.
Comments Off on Above-trend growth could cause U.S. inflation later in 2018
Market expectations of inflation have risen in recent days, after signs of wage growth – often seen as a harbinger of inflation – appeared in the January jobs report. We at Invesco Fixed Income believe investor concerns that inflation is finally showing signs of life have helped drive interest rates higher and impacted credit markets, where worries over higher interest rates (and their potential impact on companies) have caused declines in stock markets and other risky assets.1
Comments Off on What does market volatility mean for fixed income?
In my recent blog on the impact of the tax reform, I explained why I believe the new tax law should be extremely supportive of the U.S. investment grade (IG) bond market, including provisions that could lead to reduced supply. Looking beyond IG, the news appears to look good for other fixed income sectors as well.
Comments Off on A rising tide for fixed income?
Often investors become concerned about duration in a bond portfolio, believing that if interest rates rise, duration will increase the potential for losses.
Comments Off on Let bonds be bonds – don’t fear duration
The Bank of Canada (BoC) announced today it was raising the target overnight rate by 0.25% to 1.25%. The last time the BoC hiked its target rate was at the September 6 meeting. Market expectations for this rate hike began to increase several weeks ago, so it was almost fully priced into the market.
Comments Off on BoC hikes again, citing near-capacity growth
Despite the near non-stop drama of the legislative process, we ended December with the U.S. Tax Cut and Jobs Act of 2017 being signed into law. What does this mean for fixed income investors? In my opinion, the news is overwhelmingly positive for the U.S. investment grade market; here are four reasons why.
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For income-focused investors, yield remains incredibly elusive in most markets, with roughly 20% of global fixed income assets delivering negative yield. In Europe, that rises to about 40%.
Comments Off on The high-yield sweet spot
The U.S. Federal Open Market Committee (the Fed) raised the target Fed Funds Rate by 0.25% to a range of 1.25%-1.50% at today’s meeting. This is the third rate hike this year, although the first one since the Fed announced it was reducing the size of its balance sheet at the September meeting.
Comments Off on Fed maintains a slow and steady approach
The Federal Open Market Committee (the Fed) is set to convene its final meeting for 2017. It promises to be the event the markets have been waiting for since 2008.
Comments Off on Why I’m not worried about the Federal Reserve
The Canadian dollar appears to have peaked for the moment as the BoC has become concerned about the impact of a stronger Canadian dollar on the economy.
Comments Off on Currency outlook: Expect further U.S. dollar weakness
After raising the target overnight rate 0.25 percentage points at each of the previous two meetings, the Bank of Canada (BoC) kept the rate unchanged at its meeting on October 25, 2017. While growth has remained strong, it has slowed from the second quarter and the BoC appears ready to give its two previous rate hikes time to filter through the economy before taking further action. Additional uncertainty around the breakdown in North American Free Trade Agreement trade negotiations leaves the BoC cautious regarding future hikes. The Canadian 10-year yield appears to have peaked for the moment and yields have several reasons to fall from current levels, in our view.
Comments Off on Interest rate outlook: Bank of Canada to pause
After two successive rate hikes, the Bank of Canada (BoC) left the target overnight rate unchanged at 1.0% at today’s monetary policy meeting. The pause in rate hikes had been anticipated by most of the market.
Comments Off on Three is a crowd
The Bank of Canada (BoC) has hiked interest rates at two consecutive meetings, bringing the overnight benchmark rate to 1.00%.1 GDP growth and employment trends remain strong, while inflation has stayed below the BoC’s 2.0% target. The Canadian 10-year government bond yield has followed an upward trend after hitting its lows in the second quarter. We believe higher rates are likely.
Comments Off on Interest rate outlook: Bank of Canada likely to raise rate again
The U.S. Federal Open Market Committee (the Fed) held interest rates steady at Wednesday’s meeting, with a target range of 1% – 1.25%. After preparing the markets over the last several meetings, the Fed finally announced they would begin their long-awaited balance sheet reduction plans in October 2017.
Comments Off on Fed balance sheet normalization at last
The Bank of Canada (BoC) has moved firmly into the hawkish camp, with a rate hike to 1% this month, leaving the market expecting one more rate hike this year. The benchmark rate was raised to 0.75% in July.1 Recent economic data continues to surprise to the upside.
Comments Off on Interest rate outlook: BoC moves firmly into hawkish camp
In a move that surprised the market, the Bank of Canada (BoC) hiked the target overnight rate to 1% at today’s monetary policy meeting. This is the second hike in a row for the BoC. The market was not expecting the next rate hike until the Bank’s October meeting.
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