With the Fed's Help, Bond Investors Hope to Avoid a Repeat of 1994

Clear signals from the Fed on rates may prevent a market rout
Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Photograph by Andrew Harrer/Bloomberg

Bond investors have a lot to be anxious about. With interest rates near record lows, it’s not a question of whether but when rates will start rising again. Lloyd Blankfein warns that today’s interest rate environment has parallels to 1994, when then-Federal Reserve Chairman Alan Greenspan surprised the market by doubling benchmark rates in 12 months. “I worry now—I look out of the corner of my eye to the ’94 period,” Blankfein, chief executive officer of Goldman Sachs, said on May 2 at an Investment Company Institute conference in Washington. He recalled how investors used to low rates were shocked when borrowing costs rose, leading to selloffs in the bond and stock markets.

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