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Interest rates: What kind of rollercoaster is this?

Here's why investors, especially those with interest rate-sensitive liabilities like corporate pension plan sponsors, will need to take a look at their expected return and risk profiles.

By Phil Gorgone and Michael Clark | July 30, 2020 at 08:05 AM
real or faked shot from viewpoint of man sitting at top of rollercoaster rail track (Photo: Shutterstock)

Each year for the last few years we’ve been taking a hard look at the drivers behind interest rates and conveying our thoughts about where they will go in the future. When we last looked at where rates were headed last December, we surmised that without substantial global economic growth that rates wouldn’t move higher. Well … they didn’t move higher…they moved a lot lower. With the onset of a global pandemic, interest rates went on a wild ride through the first half of 2020. That ride has had far-reaching effects on investors, especially those with interest rate-sensitive liabilities like corporate pension sponsors.

So how has the current economic environment affected interest rates and what could cause them to change course between now and the end of the year? In this article, we’ll look at:

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