For companies and other money market investors looking to increase returns from almost zero, opportunities should arise this year as the Federal Reserve begins unwinding its extraordinary pandemic-era stimulus.
But navigating hikes in short-term rates, and the additional possibility of increased issuance of government debt, to the best advantage will take extra effort and careful strategizing.
The Fed is preparing to hike interest rate as soon as March, with three or four increases expected this year, which will lift yields on very short-term bills that remain near historic lows. Jeffrey Weaver, senior portfolio manager and head of the municipal, short-duration fixed income, and money market teams at Allspring Global Investments, thinks a useful strategy is to keep most investments shorter-term until after each hike then deploy money to lock the rate in.
“If the market begins to price in more rate hikes than we expect then we can take advantage of that and buy those longer securities,” Weaver added. The Fed’s last tightening cycle from 2015 to 2019 ended with large funding stresses as demand for overnight loans from companies, banks and other borrowers overwhelmed supply when the Fed reduced its balance sheet.
Deutschland Neuesten Nachrichten, Deutschland Schlagzeilen
Similar News:Sie können auch ähnliche Nachrichten wie diese lesen, die wir aus anderen Nachrichtenquellen gesammelt haben.
European stocks set to fall slightly as markets mull Fed, earningsEuropean stocks are set to open fractionally lower on Tuesday as global investors remain attuned to the policy direction of the U.S. Federal Reserve and the start of earnings season
Weiterlesen »
EUR/USD: Dollar to remain supported as Fed seeks to curtail inflation – Danske BankAnalysts at Danske Bank point out that the increasingly hawkish stance from the Federal Reserve continues to support their expectations of a stronger
Weiterlesen »
Fed: January's statement likely to signal rates could be lifted at its next meeting – Wells FargoThe Federal Reserve, at the January meeting, will likely tee up the fed funds rate to increase as soon as its next meeting, explain analysts at Wells
Weiterlesen »
EUR/USD consolidates in 1.1400 area in thin US holiday trade as markets mull hawkish Fed betsFX market volumes are thinner than usual this Monday, with US markets shut for Martin Luthar King Jr Day, making for more tentative/subdued trading co
Weiterlesen »
Stressed Beijing will buck Fed's tightening trendThe Chinese economy is declaring independence from the U.S. Federal Reserve Board. Gross domestic product grew 8.1% in 2021, well above target, but activity slowed sharply toward the end of the year, so the central bank surprised markets with a rate cut on Monday morning . Low inflation and a strong yuan give Beijing room to decouple further.
Weiterlesen »
Morgan Stanley Says Crypto Markets Are Weakening as Central Banks Look to Tighten.MorganStanley says that crypto markets have been weakening as central banks look to tighten. By willcanny99
Weiterlesen »