0638 GMT - For investors, the question is no longer simply whether the Federal Reserve will hike interest rates, but how much additional tightening is already reflected in bond prices, says Eric Souders at Payden & Rygel. Markets continue to price additional tightening ahead and that is broadly consistent with Payden & Rygel's expectations. "If anything, somewhat more tightening than we anticipate," the director and portfolio manager says. This backdrop creates an increasingly attractive risk-reward proposition at the front end of the U.S. Treasury curve. "Two- to three-year Treasurys offer yields well above cash and three-month Treasury bills, providing a meaningful cushion against further increases in rates," Souders says. Yields can rise further without necessarily producing a negative total return, he adds.
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