“Valuations are good with the Fed getting closer to the end of its current hiking cycle,” Madziyire said. “The question is whether you are willing to take duration risk now or stay in the front-end until the Fed reaches its policy peak.”
Still, most see the backdrop favoring higher yields and a more turbulent market. A measure of debt-market volatility surged in September to the highest level since the global financial crisis, while a gauge of market depth recently hit the worst level since the onset of the pandemic.
“The Fed and other central banks had for years been the ones suppressing volatility, and now they’re actually the ones creating it,” Mischler’s Capelo said.
This article was provided by Bloomberg News.