Capital Markets: Observations & Insights

Tightening Underway ​ Party Without the Punch?

• As the Federal Reserve normalizes policy… • …It is driving short-term interest rates higher

• This is largely a worldwide phenomenon…

• ...Because of the interconnectedness of the global economies

U.S. 2-Year Treasury Yield

G7 + China 2-Year Government Yield Year-over-Year Change

2.5%

120

2.0%

80

40

1.5%

0

1.0%

-40

Basis Points

0.5%

-80

-120

0.0%

Italy

U.S.

U.K.

China

Japan

Jul-16

Jul-17

France

Jan-17

Jan-18

Mar-16

Mar-17

Mar-18

Nov-16

Nov-17

Sep-16

Sep-17

May-16

May-17

Canada

Germany

Source: FactSet as of 3/29/18.

Page 3