Fed policy update kicks off new flight to yield in ABS

By Jennifer Kang
03 Sep 2020

US ABS investors are wading deeper into the market for esoteric assets, prompted by the Federal Reserve’s updated view on inflation that is sure to keep rates lower for longer and further compress yields across fixed income. Jennifer Kang reports.

The Federal Reserve announced last week that it will allow inflation to run higher than its long-standing 2% target, which signals that interest rates are likely to remain at or near zero through 2022. Coupled with tight spreads in the securitization market, the prolonged expectation for low rates is ...

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