Incisive US Fixed Income analysis from Income Research + Management’s Sr PM Jake Remley: ‘Will the Real Rate Please Stand Up?’
‘A heavyweight fight is brewing, and fixed-income investors sit ringside. Interest rate Bulls have the steepness of the yield curve, threats to global growth from COVID variants, and labor market slack in their corner. Interest rate Bears have rising inflation data, highly negative real yields, and heightened Treasury supply in their corner. Both await the ding-ding of the bell by the Federal Reserve, signaling that their monthly purchases of $80bn Treasuries and $40bn Agency MBS will begin to taper towards zero. In the meantime, investors can handicap this bout by dissecting current Treasury market pricing with a few tricks and TIPS.’……