Even If Rates Rise, They’re Unlikely to Wander Out of Range in the Long Run
Divergent risks are underpinning the Treasury market.
The election of Donald Trump and the Republican sweep of Congress immediately sparked optimism within financial markets. Equity indexes and Treasury yields rose with the expectation that fiscal stimulus and economic reforms would contribute to an increase in growth, and possibly, inflation. Since December, interest rate volatility has been in steady decline and Treasury yields have been range-bound, while equity markets continue to set new highs.
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