The immediate reaction after the Federal Reserve raised rates Wednesday was for Treasury rates to rise across the yield curve....MORE
But as the market digests the news — which includes projections for three hikes next year when many investors expected the Fed to stay at two — investors should look for the yield curve to flatten, say strategists.
Thomas Byrne of Wealth Strategies & Management told Barron’s:
If the Fed is true to its three-hike forecast for 2017, the UST yield curve should flatten. This is because the short end is not priced for three moves and Fed tightening is anti-inflationary. This should limit and, eventually, halt the rise of long-term UST yields.Torsten Slok of Deutsche Bank Securities made much the same point to clients....
Wednesday, December 14, 2016
"Yield Curve Likely to Flatten Due to ‘Hawkish Hike’"
From Barron's Income Investing: