FYI: Three Possible Scenarios
As we anticipate turning to the next calendar page, most portfolio managers are weighing the potential effects of Fed actions on their portfolio strategies. Worries about tightening are rational, because Fed funds rate hikes have historically negatively impacted financial markets. However, the impact of the actual announcement differs under different circumstances.
While there are many ways that this may play out, three popular scenarios include:
1.Well-anticipated Fed funds increases versus surprises
2.Steepening yield curve due to “too hot” fears
3.Flattening yield curve due to “too cold” worries
Regards,
Ted
http://www.etf.com/sections/etf-strategist-corner/3-fed-scenarios-bond-etf-investors?nopaging=1
