Question 1
Several developed nations have issued government bonds with negative yields. At the same time, US government bonds, the safest and most credit worthy bonds in the world, trade at higher yields than nations that are considered not as fiscally sound.
· Define negative yields.
· Give five reasons, using the presentation from Blackrock and other sources, to explain why there are negative bond yields and why or why not the US may also experience negative rates in the near future.
Question 2
Much of the discussion in class has been around the FED raising rates. The FOMC is meeting this month and again will confront the issue of raising rates.
· Will the Fed raise rates this month or sometime this year? Will they raise once, more than once or not at all by Jan 1 2017? Please provide reasoning for your responses.
· Also comment on if raising rates will or should effect long term interest rates, and if so, in what manner? You must support your answer with at least five well informed economic observations.
Attachment:- investment_outlook_q1_2016_instl_1.zip