Are Negative Interest Rates Headed to the U.S.?

February 2016
Just two months after the first U.S. interest rate hike in nearly a decade, there has been a meaningful increase in commentary surrounding the potential for negative interest rates in the U.S. Outside of the U.S., negative interest rates have been around for several years and many developed country bond markets have parts of their yield curve in negative territory. Although the potential for negative interest rates in the U.S. seemed implausible just a few months ago, we believe the possibility should not be dismissed. To be clear, the focus of this paper is on the possibility of negative rates at parts of the Treasury yield curve as opposed to negative policy rates as set by the Federal Reserve. The balance of this paper will detail several reasons why we believe U.S. interest rates could head lower, outline what investors should expect in a prolonged low interest rate environment, and examine how investors can position their portfolios going forward.


Download PDF