Charts of the Week
U.S. Treasury Yield Curve
Chart of the Week for March 29, 2018 - April 5, 2018
U.S. Treasury yields over the past year have risen across all maturities as shown in the chart above. Yield curves plot yields of similar-quality bonds against their maturities, ranging from shortest to longest. By showing the relationship between the yields and the time to maturity, investors can compare the yields offered by short-term, medium-term, and long-term bonds. The yield curve may also suggest insights into investors' expectations for inflation and economic growth across different time periods.
The Federal Open Market Committee (FOMC) of the U.S. Federal Reserve Board raised the target range for the Federal Funds Rate on March 21, 2018. This was the sixth increase since December 2015 and expectations are for another two increases in 2018. Yields have risen across all maturities, but the increase has been greater in the short- and medium-term yields than in the long-term yields. One-month and one-year yields have increased about one percentage point, but 30-year yields have increased less than one-tenth of a percentage point. Along with the increase in the target rate range, the FOMC also increased its forecast for U.S. Gross Domestic Product for 2018 and 2019, indicating that the strong current economic conditions may continue through next year.
Investors should be aware that bonds and bond mutual funds generally lose value as yields rise and generally increase in value as yields fall.
Posted by: sarah_oz@yahoo.com
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