關於金融市場, 投資一問 (Essay問題求教...急)

Your understanding is correct. You can discuss the topic on 2 aspects: US Treasuries and US Corporate Bonds. As we all know that lowering interest rate will rise the price on short tenor Treasuries (<1year) as market expected further cutting in interest rate and heightening financial uncertainty hence stimulating the investors to buy short term fixed rate Treasuries (almost riskless). However, too aggressive rate cut will bring about inflation later, thus, long term interest rate will rise thus lowering the long term Treasuries.An INVERTED YIELD CURVE is observed. For Corporate bonds market, the credit premium will rise with financial uncertainty, the investors who have bought the corporate bonds previously will suffer as corporate bonds drop. They can hedge their exposure by purchasing CREDIT DEFAULT SWAP or by shorting other similar corporate bonds ( same industry) to partially hedge the credit risk.