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March; Federal Reserve hike means Treasury sell-off? Actually, historically, quite the opposite

The chart below‎ demonstrates the change in US 10-year Treasury yields in the run-up to a Federal Reserve (Fed) hike, and what then happens in the weeks afterwards. This covers the 70 Fed hikes over the past 37 years.

In the run-up to a Fed hike, US yields tended to rise. This is no surprise, considering that markets will have tended to price in an increasing probability of a hike ahead of an actual Fed hike. On average, yields rose 18 basis points from three weeks before the hike to the actual hike itself. This time is no different, with US 10-year yields rising 17 basis points over the past three weeks.

But interestingly, in the weeks after a hike bonds have tended to rally, with the average fall in 10-year yields being 3 basis points. The hit rate is also high – 10-year yields fell 70 per cent of the time‎.

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Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested.

Past performance is not a reliable indicator of future results. If the currency in which the past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor’s local currency. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail.

This is a marketing communication issued by Allianz Global Investors GmbH,, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht ( This communication has not been prepared in accordance with legal requirements designed to ensure the impartiality of investment (strategy) recommendations and is not subject to any prohibition on dealing before publication of such recommendations. The information contained herein is confidential. The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted.


AFH Alan Hudson 700

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