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Rating:Fundsters: Investors Don't Believe the Fed Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, September 17, 2013

Fundsters: Investors Don't Believe the Fed

News summary by MFWire's editors

Bloomberg News reports that bond investors are losing confidence in the Fed's promise to keep benchmark interest rates near zero into 2015 as the economy ramps up.

Where is the evidence? It's in wider price swings for shorter-term securities, Bloomberg News writes. The bond fund king himself, Pimco's Bill Gross [profile], recommended debt with short maturities. JP Morgan [profile] financial models show an end to the central bank's zero rate policy could have a bigger impact on bonds than the spring and summer selloff, Bloomberg News writes.

“There's a bit of a discomfort level being priced into the market,” Erik Schiller, a principal and senior portfolio manager at Prudential Financial Inc. [profile], which oversees more than $1 trillion, is quoted as saying in the article. “Asset purchases have been an emergency measure and we are beyond the need for those measures, and the Fed will try to get more toward traditional policy.”

JP Morgan's model shows that the end of that policy would bring 10-year notes higher by 25 basis points, which JP Morgan argues is already priced into the market, Bloomberg News reports.

To read more, click here

Edited by: Casey Quinlan

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