Global Bonds Can Stand Fed Hikes

If the Federal Reserve lifts U.S. interest rates in 1997, as the Organization for Economic Cooperation & Development forecasts in its latest semiannual outlook for 29 member countries, will the hike bring turmoil to global bond markets? That happened when the Fed tightened in 1994, and bond yields outside the U.S. soared though economic fundamentals hardly justified their surge. If that were to happen in 1997, the fragile recoveries in Europe and Japan would be at risk.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.