It has been a roller-coaster ride for bond investors since the US Federal Reserve first signalled that it would tighten monetary policy. Investors and issuers may need to adapt to a steady rise in rates. Allgood things have to come to an end - and so it is with the five years of easy money offered by central banks. In May last year, the US Federal Reserve gave a clear signal that it would start to withdraw its extraordinary monetary stimulus. Markets drew a simple conclusion - interest rates would rise and bond prices would fall. Between May and December that was the case as the yield on the benchmark 10-year US Treasury spiked from 2% to 3%. But since the Fed actually started to embark on its steady programme of withdrawing an extra US$10bn of quantitative easing every month, yields have fallen.
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