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While yields have been pressured in recent weeks on political risks and the European Central Bank’s dovish stance on policy changes, fixed-income investors should keep in mind that the Federal Reserve is planning to reduce its $4.5 trillion bond hoard, which could lead to Treasury bonds being dumped onto the market and higher rates.
Furthermore, the Federal Reserve has already shown its willingness to achieve interest rate normalization. However, the headline inflation remains muted and the Fed is still waiting on inflation to reach its 2% target before making any more drastic changes.
For more information on the fixed-income market, visit our bond ETFs category.