SEI believes that current economic conditions will lead to higher U.S. Treasury yields over the coming year.

SEI initiated a position designed to benefit from higher intermediate-term U.S. Treasury yields. We believe that current economic conditions do not justify the low level of yields currently in the belly, or intermediate portion, of the yield curve. These conditions include sticky inflation (especially in the services and real estate components), a robust labor market, and accommodative financial conditions. We have chosen to implement this view via an interest rate swap that will benefit from a rise in rates. This complements our current “steepener” trades that will benefit from a steeper yield curve (increased difference between long-term and short-term yields).
 

Important information

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only. There are risks involved with investing, including possible loss of principal. Diversification may not protect against market risk.

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