• Ten Year Treasuries touched 5% on October 19th, up 1.43% since Jan 1. • Two-year rates exceed ten-year rates in July of 2022 (yield curve inversion). • In the past, yield curve inversion has always signaled recessions. • The recessions typically have occurred 18-24 months after inversion. Over the course of the past months, […] Read the full article…
• The Federal Reserve is aggressively raising rates (1.5 – 1.75%), but continues to lag the market with 2-year Treasuries at (2.8% on July 5). • The economy is likely to go into a recession, if not already in one (based on the Atlanta Fed GDPNow forecast). I expect the recession to be shallow. • […] Read the full article…
• In it’s March 15 statement, the Fed said that, ‘in the near term the [Russian] invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity’. The Fed raised rates just .25% • Bonds rates have risen sharply this year and most of the yield curve is […] Read the full article…
For most of 2021, Fed Chairman Powell was talking about inflation as being transitory. Now Powell is talking much tougher on inflation. During his confirmation hearing on January 11, he said the following, “As we move through this year … if things develop as expected, we’ll be normalizing policy, meaning we’re going to end our […] Read the full article…
In a speech this morning, Jerome Powell, head of the Federal Reserve, said that the economy had met the test for ‘substantial further progress’. He went on to say that the Federal Reserve could begin tapering asset purchases this year, but that the Federal Reserve will be patient when it comes to raising interest rates. […] Read the full article…
According to data from Envestnet, many American’s used their stimulus checks to trade stocks. As reported by CNBC, Envestnet estimated that those earning between $35,000 and $75,000 increased stock trades by 90% in the week after they received their stimulus check. Checks went out beginning the April 13. Since April 13, the S&P 500 is […] Read the full article…
• The Fed cut rates for the third time since July on Wednesday • The target lending rate is now 1.5% – 1.75% • In the last four times the Fed cut rates, when they stopped at three cuts the economy avoided recession As expected by the market, the Fed cut rates again today. Jerome […] Read the full article…
The financial press and markets don’t like the inverted yield curve By itself, the inverted yield curve is a weak predictor for near term recession Credit markets, employment, and production factors should be considered The yield curve model is predicting 20% chance of recession while the more complete model is projecting recession risk in the […] Read the full article…
• The Federal Reserve is expected to cut rates .25% on Wednesday • The US economy showed better than expected growth in Q2 at 2.1% • Still, the Federal Reserve is concerned about slow global growth and trade tensions and will likely make a preemptive cut to keep the economy on track. The Federal Reserve […] Read the full article…
Yesterday, the Federal Reserve held the Fed funds rate at their current level, between 2.25 and 2.5%. This after hiking rates 4 times last year. The Federal Open Market Committee (FOMC) minutes state, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future […] Read the full article…
Ten year treasury rates have spiked in recent days and stand at 3.22%. This is the highest level since 2011. Last month the Federal Reserve raised rates for the third time this year. Chairman Powell said in an interview last week with PBS, “Interest rates are still accommodative, but we’re gradually moving to a place […] Read the full article…
In the last several months, it would have been hard to miss the flurry of articles discussing the flattening yield curve and likelihood that a recession is near. Here are just a few examples, “The U.S. Yield Curve Is Flattening and Here’s Why It Matters”, “Replace Yield Curve as a Recession Predictor? The Fed Considers […] Read the full article…
The interest rate yield curve continues to flatten. US stock prices continue to melt up. PE ratios have stretched into mildly overvalued territory. We remain neutral weighted on the US stock market and may adjust tactical allocations down if the PE ratio stretches much further. Interest Rates The Federal Reserve, as expected, hiked the Fed […] Read the full article…
Jeff Gundlach, CEO of DoubleLine Capital, spoke about his views on the US economy and global markets in his Tuesday webcast “Just Markets”. I’ll highlight some of his key points. Interestingly, Gundlach was one of a very few investment professionals who predicted a Trump win. He has a pretty strong track record on his market […] Read the full article…
According to the Morningstar Direct U.S. Asset Flow Update published June 15th, US taxable bond funds had a net inflow of $15.4 billion in May. The report indicates that flows for bond funds were mostly negative last year. Beginning in February this year, flows turned positive after the market volatility in January. The report also […] Read the full article…
Given recent events in the financial markets such as Fed rate hikes and weakness in oil prices, we are seeing increased volatility in certain bond sectors. In this piece, I’ll review recent performance and future outlook with an emphasis on bond funds we hold in Brightwood Ventures model portfolios. Recent Performance Bond sectors vary […] Read the full article…
Did the Fed Depress the US Economic Recovery? In a recent blog post Dr. Ed Yardeni, a noted economist, opined that the Federal Reserve contributed to depressed economic recovery in the US. He cited three very interesting arguments and I thought it may be of interest to summarize his thoughts here. (source: www.blog.yardeni.com May 26, […] Read the full article…
The Federal Reserve has been signaling that it expects to raise interest rates based on improvements in the economy. The exact timing isn’t clear and the Fed has indicated that they will be data driven. Should you be concerned about how any rate increase will affect your portfolio? In this article, I will examine the historical impacts on the US market based on the first rate hike from the period from 1982 to present. […] Read the full article…
Today the Department of Labor released jobs data for March indicating that the US economy added just 126,000 jobs in March. For 2015, the US has averaged under 200,000 new jobs per month in contrast to the 289,000 monthly average in Q4. The ISM release earlier this week reported a PMI figure of 51.5% for […] Read the full article…
There is a good deal of talk about when and how aggressively the Fed will raise interest rates. This has caused many including, Eric Rosengren, President of the Boston regional branch of the US Central Bank, to go on record as saying of the current 2.15% 10 year rate as, “not a rate that is going to be sustainable in a completely normalized economy, which does imply the 10-year rate at some point in the normalization process will not be as low as it currently is.” (source: MarketWatch). Let’s unpack the issue here in a bit more detail. […] Read the full article…