Emerging Market bonds

Fed Raises Rates, Stocks Crash

Fed chair Yellen raised the Fed’s rate today, as expected, by 0.25%. The Russell 2000 went down 1.25%. The yield on the ten year Treasury went up 0.05%. As short term rates rise this discourages inflation which makes long term bonds more attractive. Currently the dollar based bonds yield much more than bonds of other Developed countries such as Germany or Japan where long term rates are close to zero. The Fed will gradually raise rates in quarter point increments in 2017 by a cumulative 0.75% until the Fed funds rate is in a range of about 1.25% to 1.45%. It is possible that the yield curve could go flat and that long term Treasuries could actually drop to come

2017-01-10T23:32:49-08:00December 14th, 2016|mayflowercapital blog|Comments Off on Fed Raises Rates, Stocks Crash