Moreover, low inflation, declining federal budget deficits and narrow trading ranges for currencies, suggest fixed-income and other yields across the globe will converge, he said. Combined, these two factors are likely to produce lower market volatility in the fixed income securities arena, he told investors. Fixed income securities range from corporate bonds to securities issued by the United States Treasury and various federal agencies.
Yield represents the rate of return on a bond.
In addition, Mr. Sowanick said he expects the Federal Reserve Board of Governors to raise short-term interest rates, as part of its continuing tighter monetary policy to rein in the burgeoning U.S. economy. The yield curve represents the level of interest rates of similar securities with maturities ranging from the shortest to the longest. The curve is used by analysts to assess the probable direction of rates, and whether economic growth may increase or decline. Generally, the curve is positive, as investors who invest for longer periods are compensated for greater risk by receiving a higher yield on securities. Merrill Lynch operates an office in San Juan providing a range of products and services, including direct access to Merrill Lynch trading desks, research and credit analysis, as well as variety of advisory services.