Treasury Yields to Stay Low and Range-Bound Says Prudential Strategist

U.S. treasury yields are likely to remain low and range bound this year, and spreads right now look cheap to fundamentals in many cases, said Robert Tipp, chief investment strategist at Prudential Fixed Income. 'Right now you are in the in-between spot, you have the Fed Funds rate at 0.375 percent and the Fed is saying they are going to 3.375 percent so the 10-year Treasury is in a holding pattern there as investors try to figure out where this is really going to end up,' said Tipp. In Tipp’s view, fear of the Fed's lift off has put strain on the financial markets, creating both risks and opportunities. For long term investors, he said he sees opportunity in fixed income similar to the post-taper tantrum environment. For example, he said high yield spreads now appear as if they are pricing in a recession due to the problems in the energy sector. 'Not necessarily in some of the depressed industries, but across the broader names that have been thrown out with the bathwater, you are looking at good valuations and range bound trading,' said Tipp.