Marquette Survey: 3Q 2015 Fed Rate Hike, Flattened Yield Curve Expected

February 26, 2015

CHICAGO, February 26, 2015 – Most institutional fixed income managers expect the Federal Reserve to start raising rates in the third quarter of this year, according to the results of a Marquette Associates, Inc. survey released today. The asset managers Marquette surveyed also expect the yield curve to rise and flatten, major spread widening to occur in 2016, and the U.S. to provide the strongest fixed income returns.

“At times like this when we’re experiencing major shifts in the market, we try to gather as much data as we can to keep our clients informed,” said Greg Leonberger, director of research for Marquette. “Like our QE3 survey a couple years ago, our rate hike survey helps round out our views with the perspective of leading institutional fixed income managers.”

To gain a better sense of expectations for Fed rate hike timing, as well as how the shape of the yield curve is expected to change, Marquette surveyed 41 fixed income investment management firms, large and small, for their best estimates based on the current market environment. Responses were also collected on when to expect a major credit spread widening, and defaults from corporate bond issuers, given the releveraging that has taken place over the last eight quarters. In addition, Marquette surveyed manager expectations on which region of the world might provide the best fixed income returns in 2015.

“Our rate hike survey provided some additional clarity on 2015, but any number of geopolitical, fundamental, and/or technical developments in the coming months could change these expectations,” said Ben Mohr, senior research analyst for Marquette. “With central bank divergence across the various economies of the world and the recent energy market dislocation, increased volatility is expected to be a dominant theme we will continue to monitor throughout the year.”

For a complete briefing on findings from the Marquette Fed rate hike survey, please download the newsletter 3Q15 Rate Hike and Yield Curve Flattening Expected – Marquette Associates Survey.

About Marquette Associates
Marquette Associates is a Chicago-based, independent investment consulting firm that guides institutional investment programs with a focused three-point approach and careful research. Marquette has served a single mission since 1986 – enable institutions to be more effective investment stewards. Marquette places client fiduciary duties first through complete independence and 100% employee ownership. The firm currently serves more than 250 clients with over $100 billion in assets – from public funds, unions and corporations to endowments, foundations and other non-profits.

For more information, please contact Brian M. Wrubel at 312.527.5500 or bwrubel@marquetteassociates.com.