IWM - Lower Bond Yields: Investors Are Seeing Less Economic Growth And Lower Rates Of Inflation

• Longer-term bond yields have fallen recently, seeming to indicate that investors believe that economic growth is not that strong and that inflation will not be a major factor.
• This attitude shows up in the flattening of the Treasury yield curve, which now projects that future short-term interest rates will not be much higher than current short-term interest rates.
• This picture is consistent with the feeling that the Federal Reserve will have to back off its current accommodative monetary stance where it buys $120.0 billion in securities every month.
• All this points to a bumpy road for Fed Chair Jerome Powell and the Fed as it attempts to manage its way out of its current aggressive quantitative easing stance.

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