- The prospect of an increase in the federal funds rate has raised questions about future bond performance for some investors.
- Our analysis of global government bond data from 1984-2021 shows no reliable relation between past changes in the federal funds rate and either future bond excess return over cash or future term premiums.
- We can target higher expected returns by dynamically varying a strategy’s duration decision based on current term spreads across global yield curves.
Read the full article by Dimensional Researcher Mingzhe Yi, “All Eyes on the Fed? A Look at Federal Funds Rate, Bond Return, and Term Premium”, HERE.
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