The Current State Of Fixed Income
We review the current state of fixed income. The following are key observations for the latest bond/fixed income markets
Yield curve is still inverted but improved
The first thing to look at in bond markets is the yield curve that started to invert late last year. Intuitively, interest rates (yields) for short term bonds should be lower than those of longer term bonds. For example, you would expect paying lower interests for your mortgage that are mature in 5 years than those that are mature in 10 or 30 years. If now, the interest rate for one year Treasury bill is lower than that of 5 years, two things could happen:
The one year rate comes down, signaling a further loose monetary policy to accommodate slower growth.
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