Bond Market Debates How to Tame an Unpredictable Yield Curve
- Most favor cap on short rates; SocGen sees case for long end
- BlackRock’s Miller expects ambiguity as recovery unfolds
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The Treasury yield curve’s uphill sprint has faltered as investors contemplate just how the Federal Reserve might want to check its progress.
Investors are wading into the central bank’s debate over a possible return to the 1940s-era policy of yield-curve control to cap borrowing costs as the economy recovers. Billionaire money manager Jeffrey Gundlach sees rising long-end yields spurring the Fed to action. While most expect a low-yield target for shorter maturities, potentially as soon as September, Societe Generale sees a case for focusing further out the curve. And BlackRock Inc. is skeptical that the Fed will go out on a limb with a specific level until more drastic action looks needed.