This is an outstanding article by Ben Bernancke, former chairman of the Fed. It’s an important read in my view. Check it out!
via Why are interest rates so low, part 4: Term premiums | Brookings Institution.
The context is that the Financial Services industry is beginning to spook investors in fixed income securities and fixed income funds that an interest rate rise would be seriously bad news [when interest rates go up, fixed interest securities fall in value, especially long-dated securities). Meanwhile, fixed interest funds are still surprisingly attractive.
I think Ben Bernancke’s article highlights why smart investors are happy to stay with fixed income securities for the time being.