Between the Federal Reserve’s tightening stance, stable long-term inflation expectations and technical factors like rising short-dated Treasury issuance, an inverted yield curve may also be on the cards, strategists at JPMorgan have warned.
While that would constitute an ominous sign for growth, holders of these structured products don’t have to worry about their interest rate turning negative: the coupons are typically floored at zero. And investors may find there’s a bid for their beaten-up securities from bargain hunters, particularly in light of recent curve steepening.
This article was provided by Bloomberg News.