Federal Reserve Rate Hike Right on Schedule
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Federal Reserve Rate Hike Right on Schedule

Based on price action prior to the June FOMC meeting, the U.S. Treasury (UST) market did not seem to discount the potential policy actions that could be forthcoming later this year. Following the May jobs report, the UST 10-Year yield fell to 2.15%, the lowest reading since right after Election Day. In our opinion, if the Fed does ultimately tighten monetary policy by implementing both rate hikes and balance sheet normalization, UST yields may be susceptible to some upside pressure.

This article was contributed courtesy of WisdomTree Senior Fixed Income Strategist Kevin Flanagan.

Unless otherwise noted, data source is Bloomberg as of 6/9/2017. 

Important Risks Related to this Article

Fixed income investments are subject to interest rate risk; their value will normally decline as interest rates rise. In addition, when interest rates fall, income may decline. Fixed income investments are also subject to credit risk, the risk that the issuer of a bond will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.

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