An unusual rebound may provide opportunities even as rates rise.
Key Insights:
T. Rowe Price investment professionals have varying views on the recent increase in Treasury yields but expect an atypical economic rebound later in 2021.
We highlight viewpoints related to inflation protected securities, the Treasury yield curve, dividend-paying stocks, emerging markets, and the Federal Reserve.
We believe that our diversity of views on the implications of rising rates can give our investment professionals an advantage in this unusual environment.
Just as the sudden shutdown of much of the global economy at the onset of the coronavirus pandemic in 2020 was unprecedented, the expected recovery in 2021 is likely to be unique. Developed market central banks seem determined to maintain their extremely accommodative monetary policies, and fiscal stimulus in many countries—as evidenced most recently by the USD 1.9 trillion spending package in the U.S.—should make the economic rebound much more robust than previous recoveries. With the consumer saving rate at record highs in the U.S., pent-up demand could also help drive growth as accelerating vaccinations support economic reopening.