Global Sales Trader Althea Spinozzi, a specialist in fixed income, takes a closer look at the bonds market following the FOMC’s decision to hike interest rates.

She says that the US Federal Reserve sounded more hawkish over the long term and that, surprisingly, bond yields closed lower with 10-year Treasuries at 2.88%.

The spread between 10- and two-year Treasury yields is at lowest in a decade, says Spinozzi, and that if the yield curve continues to flatten, the economy will suffer more stress.

Until we see further rate hikes, alongside economic growth, the market may continue to support tight valuations, she adds.