U.S. Interest Rate InsightsU.S.InterestRateInsights

The burgeoning stock of negative-yielding debt across the international markets has investors wondering: will it happen in the U.S. too? Given our long-standing "low for long" thesis for the global bond markets, we expect U.S. rates to fluctuate around current levels and ultimately remain positive given some key distinctions between the U.S. and the growing list of negative-yielding countries. Our assessment starts at the front-end of the curve and whether the Federal Reserve could resort to a nominally negative Fed funds rate. We then look at factors affecting longer-term rates.

The recent reduction in global growth, inflation, and long-term interest rates occurred faster than we expected. Therefore, our prior, already-below consensus long-term interest-rate forecast appears too high. As the countdown to zero across the developed markets progresses (more in real terms in the U.S. and more in nominal terms in core Europe and Japan, for example), this paper looks at the factors that have continued to push the interest-rate equilibrium lower and the market implications of an even lower-for-longer rate environment.

In this paper, Robert Tipp, CFA, Chief Investment Strategist and Head of Global Bonds discusses the Federal Reserve's implicit adoption of a "market-collar" approach, becoming more accommodative when markets become too risk averse (the well-recognized "Fed put") and removing accommodation if markets become too ebullient (the "Fed cap"). The result of the Fed's "market-collar" may well be a prolonged economic expansion with perhaps a volatile, but extended, cycle for spread-product outperformance versus government securities.

In this paper, Robert Tipp, CFA, Managing Director, Chief Investment Strategist, and Head of Global Bonds explains how some forecasters may think the bear case for DM rates has strengthened-and maybe it has in the short term with G3 yields ticking higher recently. Tipp subsequently looks at the evidence that has emerged over the last several months supporting a "low for longer" thesis for DM rates over the long term. He also provides a new long-term central tendency for the U.S. 10-year yield and his expectations for the 10-year bund and 10-year JGB yields going forward.

Hedged global bond portfolio can reduce volatility and improve returns relative to a domestic-only, fixed income allocation over the intermediate to long term.

In this paper, Robert Tipp, CFA, Managing Director, Chief Investment Strategist, and Head of Global Bonds addresses questions pertaining to the recent increase in developed market interest rates, including the effects from increased Treasury supply, a rising Federal deficit, normalizing developed market monetary policies, and a weaker U.S. dollar.

We explore whether the recent rebound in inflation and G-3 yields portends the beginning of the end for a bull market that has spanned more than 30 years.

This paper considers whether aggressive monetary policies are driving market volatility and if such policies do more harm than good.

Interest rates have been low and falling for some time, yet most analysts still expect them to rise. For our part, we continue to think rates will remain low.

This brief paper provides some perspective on these watershed shifts in valuation, their probable causes, as well as what’s likely to come next.

With the Feds's days of asset purchases likely numbered, many investors fear that the surge in interest rates signals the onset of a bear market, but not us.

This paper details why the economic recovery of the early 2000s might keep long-term interest rates lower than most recoveries over the last thirty years.