Yield Curve Flattens Amid Higher Rate Hike Expectations and Geopolitical Tensions
Fixed income investors experienced three different market environments in the third quarter: a period of relative calm in July, several flight-to-safety events in August, and a resumption of risk taking in September as August risks faded. The net result during the quarter was little movement in longer-term interest rates and a flattening of the yield curve, leading to positive returns for all major segments of fixed income. Short-term rates were pressed higher by the Federal Reserve’s (Fed) commitment to a continuation of gradual rate hikes and monetary policy normalization [Figure 1].
Much like the first half of the year,... Read more