Positioning for a Rising Rate Environment
Pioneer Funds - Strategic Income
As had been widely expected, the Fed Open Market Committee raised the target Fed Funds rate by 25 basis points at its December meeting. This represents the sole rate increase for 2016, and the second increase since 2006. A further three rate hikes of 0.25% are prospected for 2017.
With treasury yields standing near multi-generational lows and mounting pressure from rising interest rates, we believe Fixed Income investors could face a very challenging risk/return environment and need to be aware of the negative impact that rising rates could have on their investments.