Research & Resources
Timely commentary to give you access to the latest macroeconomic and investments insights. Learn what investors should expect next.
Are the U.S. and other global economies strong enough to stand on their own footing without so much monetary stimulus? That is the question we at Segal Marco Advisors have on our minds after the mid-year mark of 2017.
Since the Global Financial Crisis (GFC), central banks around the world have used a variety of monetary policy tools to bring down interest rates and stimulate economies. But even 10 years post-crisis, many developed countries still have government bond yields that are historically low.
In June 2017, the Federal Reserve Open Market Committee indicated that, provided the economy continues to perform as anticipated, the Fed would soon begin implementing balance sheet normalization. The term “balance sheet normalization” means gradually reducing the Federal Reserve’s securities holdings by paring back principal payment reinvestments.
Interest rates are poised to rise in the U.S., which can mean tough times for fixed income investors. However, not all bond strategies are alike in how they perform in rising rate environments. In fact, high yield has a record of generating significant returns in periods when rates rise, but high yield is not without other types of risk.