Tag Archives: Markets

May 4, 2018
May 2, 2018
May 1, 2018
April 30, 2018
April 27, 2018
Markets

Don’t Chase the Burst in Core Inflation, Let’s Wait for it to Last
 |  Featured, Newsclips

A big bump in the pace of core inflation to 2.0% through March 2018 should not necessarily be chased by investors. History suggests large shocks to core inflation are met with muddled to narrower TIPS breakevens in the months following. Whether or not TIPS breakevens can add another 25+ bps of widening will very likely dictate the pace of hikes by the Federal Reserve.... Read More

April 26, 2018
April 25, 2018
Markets

Reviewing The Regime Change
Client Conference Calls

In his inaugural edition of a new column, Jim discusses the regime shift in interest rates. The bond market is now focused on inflation rather than financial stability. Understanding this will prove vital as central banks embark on quantitative tightening in the years to come. ... Read More

Markets

Have Surveys Become False Prophets?
Client Conference Calls

Financial markets are unfortunately suffering from a circular reference due to group-think and herd mentality. We use the information and ideas from 'the group' as a heuristic to form our own opinions. The world has become exponentially more complicated and inter-connected, therefore to remain functional we allow the crowd to help us make decisions. Unfortunately, positioning in financial markets become polarized and surveys of the economy are of waning utility.... Read More

Markets

Credit Markets Need to Acknowledge the Zombie Infestation
 |  Newsclips

We are back to inflation being THE latent factor impacting nearly all asset classes. A continued march higher in inflation causing belief by long-end U.S. Treasury investors would produce a very unfavorable scenario for zombie companies and the numerous investment grade companies on the bubble. High yield has yet to reflect much of these risks, but we would not be surprised they begin surfacing assuming U.S. 10-year yields march higher above 3.0% on the heels of higher inflation.... Read More

Markets

High Yield Finally Ready to Awake from its Slumber?
 |  Newsclips

Over the past week we provided numerous research posts suggesting U.S. high yield OAS are primed to widen. Here's why: 1) Concerted global economic growth has ended, led by Eurozone weakness, 2) High yield's negative correlation to the U.S. treasury yield curve is expected to snap toward positive like equities, 3) Cyclicals are beginning to under-perform non-cyclical, defensive sectors, and 4) Higher U.S. treasury yields put pressure on so-called zombie companies (14% of S&P 1500).... Read More

April 24, 2018
April 23, 2018
Markets

Equity and Bond Investors Viewing Risks Very Differently
 |  Newsclips

Bonds and equities are disconnected, with investors in each foreseeing risks very differently. Bond investors will remain calm as long as uncertainty over FOMC and ECB monetary policy stays very low. The Federal Reserve are enjoying the tailwinds of rising inflation expectations, but hope (surveys) and a commodities rebound will be on shaky ground in the event global economic growth continues to slow.... Read More

April 20, 2018