Fearing Rising Rates? History Doesn’t Always Repeat

0
Fearing Rising Rates? History Doesn’t Always Repeat

Today’s period of rising rates is unlike some prior rising-rate cycles, when the Fed hiked unexpectedly and aggressively. Those kinds of rate hikes can be a painful experience for bond investors. But today’s cycle is slow, steady and well telegraphed. From that, bond investors can take comfort.

Get The Full Seth Klarman Series in PDF

Get the entire 10-part series on Seth Klarman in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Also read:

  • Fund of funds Business Keeps Dying
  • Baupost Letter Points To Concern Over Risk Parity, Systematic Strategies During Crisis
  • AI Hedge Fund Robots Beating Their Human Masters

In the mid-1990s, for example, surging inflation led to a behind-closed-doors Fed decision to engage in a series of surprising and rapid rate increases that shocked the market. Three hundred basis points of tightening in a little over one year crushed bond returns.

David Abrams Explains How To Value Stocks

VolatilityContinued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More


In contrast, however, today’s cycle is slow, steady and incredibly well signaled—much like the period from 2004 through 2006, which saw positive returns across fixed-income sectors. And although there are some differences between today and 12 years ago, including the gradual unwinding of quantitative easing, we don’t see any reason to be alarmed.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

Article by Alliance Bernstein

No posts to display