Lates News

Julius Baer fixed income analyst Afonso Borges noted in a report that following the Fed's "distinctly hawkish" rate decision last week, the U.S. Treasury yield curve flattened, indicating that the Fed's enhanced credibility is suppressing long-end yields. Borges said this phenomenon supports Julius Baer's strategy of favoring intermediate-duration assets. He pointed out: "Unlike the typical rate-hiking cycles after the global financial crisis, last week's decision was anything but dovish." Borges added that previously, betting on a steeper yield curve was the primary way the market expressed concerns about institutional credibility, and now the reversal of this trend shows that the Fed's willingness to tighten policy has alleviated those concerns. "For portfolios, this supports our overweight duration stance, with a focus on intermediate-maturity bonds."