Market history · Markets ·
The reflation trade
From the second half of 2016, expectations of faster growth, fiscal stimulus and higher inflation pushed the US 10-year Treasury yield from about 1.4% in July to around 2.6% by December. Bank and industrial shares rallied and bond funds recorded steep losses over the quarter.
On 14 December the Federal Reserve raised rates by a quarter point to 0.50–0.75%, only the second increase of the post-crisis era.
The takeaway
A rapid rise in yields can hurt bond portfolios sharply even without a recession.
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.