Entering text into the input field will update the search result below

Interest Rate Outlook: Why We Expect Treasury Rates To Stay Contained

Mar. 08, 2018 1:28 PM ET
Invesco US profile picture
Invesco US

Invesco Fixed Income shares its views on rates around the world

By Rob Waldner, Chief Strategist and Head of Multi-Sector. Posted on Expert Investment Views: Invesco US Blog.

Interest rate outlook: Why we expect Treasury rates to stay contained


Strengthening inflation data have driven US yields higher in recent weeks. We expect inflation to remain on the higher side in the coming months due to statistical comparisons to a low base, but we also believe this effect should fade. Nevertheless, we have revised our 2018 expectation for US Federal Reserve (Fed) interest rate hikes from two to three due to the price pick-up. Continued broad-based price pressures could lead the Fed to hike four times this year, but this is not our base case.

At this point, we do not believe the market is worried that the Fed is letting inflation get away from it (which could cause markets to overreact, driving rates higher and creating a financial shock). While uncertainty over inflation will likely keep rates volatile for now, low non-US government yields combined with subdued inflation should contain US Treasury yields in the near term.


The sell-off in German bunds accelerated after the January European Central Bank (ECB) meeting failed to deliver the dovish tone that the market was expecting based on the strong euro. However, we believe Europe's strong growth backdrop, muted inflation and accommodative ECB have helped to support bond markets and compensate for the political fears surrounding the upcoming Italian elections. We expect the ECB to announce an end date for quantitative easing by June and to cease its bond-buying program in September.


China's short-term government bond yields fell relative to longer-term yields in February, thanks to easier liquidity conditions and improved sentiment. The People's Bank of China (PBOC) has been generous in terms of liquidity injection, but onshore investors remain cautious. This is reflected in the steeper 10-year

This article was written by

Invesco US profile picture
Invesco is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life.Be the first to know! Sign up for Invesco US Blog and get expert investment views as they post.Disclosure for all Invesco US articles: Before investing, carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. The information provided is for educational purposes only and does not constitute a recommendation of the suitability of any investment strategy for a particular investor. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state tax laws are complex and constantly changing. Investors should always consult their own legal or tax professional for information concerning their individual situation. The opinions expressed are those of the authors, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE All data provided by Invesco unless otherwise noted. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail products and collective trust funds. Invesco Advisers, Inc. and other affiliated investment advisers mentioned provide investment advisory services and do not sell securities. Invesco Unit Investment Trusts are distributed by the sponsor, Invesco Capital Markets, Inc., and broker-dealers including Invesco Distributors, Inc. PowerShares® is a registered trademark of Invesco PowerShares Capital Management LLC (Invesco PowerShares). Each entity is an indirect, wholly owned subsidiary of Invesco Ltd. ©2015 Invesco Ltd. All rights reserved.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.