“Using Bloomberg’s World Interest Rate Probability (WIRP) measure, David Ader of CRT Capital has been tracking the market’s forecast for when the Federal Reserve will actually raise interest rates for the first time in nine years. Even as many Fed officials have been saying this week that the plan is to liftoff this year, WIRP shows those odds steadily shrinking. Now March, 2016 is looking a lot less likely, too,” reports Amey Stone for Barron’s.
Low inflation also preserves the value of fixed-income assets and lift real yields, or nominal yield minus rate of inflation. Consequently, investors can stick with high-quality fixed income assets, such as government bonds. For instance, the iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) has a 7.63 year duration and a 1.85% 30-day SEC yield.
iShares 20+ Year Treasury Bond ETF
Tom Lydon’s clients own shares of TLT.