• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint

Market Impact

Bonds

Expectations of future growth and inflation by fixed income investors determine which Treasury debt maturities are the most attractive to buy. Such preferences help shape the yield curve. However, since the outlook for economic activity and price behavior frequently changes, the yield curve is constantly in a state of motion.

Stocks

The equity market has not taken the yield curve seriously, despite its proven forecasting record. This is surprising because stock prices are based on expectations of future corporate earnings and overall business activity, both of which can be foreseen by the behavior of the yield curve. Indeed, studies have shown that the yield curve can serve as an effective market-timing strategy, yet it remains underappreciated among portfolio managers.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint