“The yield curve has continued to flatten; however, because rates are rising simultaneously, it is a less ominous indicator for the economy relative to if yields were falling.”
“After a substantive increase in the first months of 2018, real yields have slowly declined, a positive indicator for stock and bond markets, as they suggest lower true cost of debt for domestic companies.”
“Despite a late-quarter rally, high-quality fixed income had a difficult start to 2018, but the ride over the remainder of the year could be smoother.”
“Spreads across various sectors of fixed income are signaling that areas of recent stress are receding, a positive omen for bonds and stocks alike.”
“The spread between the three-month London Interbank Offering Rate (LIBOR) and the Overnight Indexed Swap (OIS) has widened to its highest level since 2008.”
“Short-term high-quality bond yields have continued to increase since the lows seen in July 2016, and have moved sharply higher since September 2017.”
"High yield has faced some headwinds thus far in 2018, but fundamentals remain solid."
"We believe the rise in rates over the last six months has the potential to stick."
"Treasury Inflation-Protected Securities (TIPS) are sought after when inflation is expected to rise."
"Yield curve positioning and proper diversification remain prudent strategies to manage interest rate risk."