![\"fed_interest_rate_rises_implied_by_markets_2017.jpg\"](\"http:\/\/www.next-finance.net\/http:\/\/beta.next-finance.net\/wp-content\/uploads\/2017\/05\/fed_interest_rate_rises_implied_by_markets_2017.jpg\")
<\/a><\/p>\nFocus returns to the Fed<\/strong><\/p>\n The Fed has made clear it views the U.S. economy as nearing the central bank\u2019s employment and inflation goals and accordingly Strong demand for income and still-accommodative central bank policies in much of the world should help keep rises in yields We see yields on bonds with durations of five years or less as vulnerable in the near term to any jumps in Fed tightening
\nplans to stay on a gradual normalization path. We expect global government bond yields to rise \u2013 and prices to fall \u2013 as market
\nexpectations catch up to our base case of two more Fed rate increases this year.<\/p>\n
\nmoderate, in our view. We do expect to see a steepening of the yield curve over time, with very long term yields in particular set
\nto rise as we move from a period of accelerating growth to a new phase of sustained economic expansion.<\/p>\n
\nexpectations, and we are underweight U.S. Treasuries and European sovereign bonds. Bullish sentiment following the French vote
\nsparked selling of safe-haven assets. Rising European growth and inflation, and the prospect of a less supportive European
\nCentral Bank (ECB), may help push European and global yields higher. We expect the Bank of Japan (BoJ) to stay on hold until we
\nsee meaningful Japanese growth and inflation.