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Fixed Income—In Depth

A deeper analysis of investment trends and topics across asset classes and global markets.

March 11, 2022

Luis Alvarado, Investment Strategy Analyst

The Fed's path to policy normalization

Key takeaways

  • Federal Reserve (Fed) tightening of monetary policy via higher rates and balance sheet runoff is on the horizon, but we believe this time it may look different from previous cycles.
  • The Fed is currently navigating in an economic and financial environment that is more complicated than any other in recent history. We believe that the number of rate hikes in 2022 remains flexible and dependent on how the economy, the pandemic, and inflation levels continue to evolve.
  • The yield curve has been — and will continue to be — the most important indicator we watch during Fed tightening cycles and rising rate environments. Fixed income still plays a key role inside a portfolio for investors in search for yield, but also as a potential stabilizer when unexpected risks surface.

Download the report (PDF)