The Fed, The 10-Year Yield, And The Income Investor's Nightmare
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Roberts Berzins, CFA12.45K FollowersFollow5ShareSavePlay(7min)Comment(1)SummaryThe Federal Reserve rate cut came in as expected.Even the announced QE-lite aimed at T-bill purchases did not deviate too much from the market's expectations.However, what went a bit unnoticed (but was certainly unpleasant for income investors) was the spread widening between short-term and long-term yields.In this article, I provide more details on this dynamic and elaborate on how it might cause some serious headaches for income investors. Douglas Rissing/iStock via Getty Images Just recently, the Fed decided to cut the base rates precisely as the market had baked it in the cake. Even though, right after the cut was announced, we saw some positive system-wide reaction across the key marketThis article was written byRoberts Berzins, CFA12.45K FollowersFollowRoberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policy-level work includes the development of national SOE financing guidelines and framework for channeling private capital into affordable housing stock. Roberts is a CFA Charterholder, ESG investing certificate holder, has had an internship in Chicago board of trade (albeit, being resident and living in Latvia), and is actively involved in "thought-leadership" activities to support the development of pan-Baltic capital markets.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You