In mid-December, the Federal Reserve increased its benchmark interest rate
for the first time since 2006—and Treasury yields have been falling ever since. While that may seem puzzling, the Fed actually has little influence on all but very short-term interest rates. In fact, the 1-year Treasury yield has actually doubled since the beginning of 2015. However, longer-dated Treasury yields have fallen by 10-20% over the same time period. Longer-term interest rates are more impacted by investors expectations of future economic growth, which have been trending lower recently. When uncertainty and pessimism abound, investors still flock to Treasuries to help them sleep at night.
To learn more, check out our January 2016 Monthly Market Summary.
The discussions and opinions in this market summary are for general information only, and are not intended to provide investment advice. While taken from sources deemed to be accurate, Ballentine Partners makes no representations about the accuracy of the information in the market summary or its appropriateness for any given situation. Past performance of the indices shown is not necessarily indicative of future results.