It seems not all money managers out there have the warm-n-fuzzies for equities in 2015. Especially considering the almost two year sell-off in commodities, finally joined by crude oil in dramatic, face ripping action. In fact, one feels that the rise in interest rates in 2015 will do what is not expected; flatten the yield curve.
If the curve flattens gradually, most traders said it probably means investors believe the Fed will keep future inflation in check with gradual rate hikes. Bond traders hate inflation because it erodes the value of their fixed-income investment.
But if the curve-flattening trend speeds up?
"It's time to trade out of investments whose success depends on a strong economy... for both stocks and corporate bonds," said Anthony Crescenzi, chief bond market strategist at Miller, Tabak & Co., an institutional brokerage.
This means reducing exposure to sectors like retail, transportation and automobiles and moving into defensive picks like health care and consume