Storied debt ceiling games Once upon a time, the U.S. government imposed a limit on how much the country could borrow. A debt ceiling was a prudent idea and a good story, but in reality, that ceiling was breached countless times since its inception. In January of this year, the U.S. broke above the most … Continue reading Playing Dirty with Default
OVERVIEW The third quarter began with a broad rebound in risk assets. The global equity market regained +13% from its June lows by mid-August. However, sentiment turned again and markets have been volatile since. Year-to-date the global stock market is down near-26%. Emerging markets fared worse, down close to -28%. The losses are broad even … Continue reading Q4 2022 Update
Much ink has been spilled over the inverted US Treasury yield curve lately, and I'm guilty of adding to the mess in my previous posts. This is a topic that may seem abstract and complicated to some, but it's actually quite simple. We'll clarify the concept in this post for those puzzled by all the … Continue reading Reading Yield Leaves
Back to 1 Last year when the 10-year Treasury yield breached 3% the markets were convinced the era of low long-term rates was over. But yields are now back down to a 2% handle. And just as quickly as some predicted 5% Treasury yields, some are now predicting 1%. 10-YEAR US TREASURY YIELDS Fixed-income investors … Continue reading Hungry For Yield
The official numbers aren't in yet but it looks like 2015 ended without a bang for US markets. The S&P 500 managed somewhere around 1% total return and the Barclay's Aggregate ended up about .5% -- nothing worth getting excited over. Of course, across the globe and everywhere in between there were substantial divergences in … Continue reading Halfway Between Double or Nothing
Back in April, Bill Gross called shorting long-term German Bunds the "short of a lifetime." Gross was basically saying the ~0.95% yield on the 10-year German Treasury was at an unsustainable low, and that an inevitable yield reversal was the biggest "no-brainer" he saw. And he was right! Just shortly after his call yields did … Continue reading Miss of a Lifetime
Speculation has been rampant about when Janet Yellen and the Federal Reserve will finally begin raising interest rates. Last month all the buzz was focused on whether Yellen would drop the word "patient" (with respect to rate increases) from her scheduled Fed policy statement. She did, and ever since strategists and traders all up … Continue reading Has Janet Lost Her Patience?
A guest post by Wei Trieu. On September 26, 2014, Bill Gross announced his sudden departure from PIMCO, the firm he co-founded in 1971. This shake-up comes at an already troubling time for the investment company after the heir apparent, Mohamed El-Erian, announced his resignation earlier in the year. The firm’s flagship Total Return fund … Continue reading Bill Gross’ Departure from PIMCO
After almost six years and over $4.4 trillion in asset purchases, the Federal Reserve plans to end its unprecedented monetary policy known as quantitative easing, or “QE,” in November 2014. Though the end of QE has been widely anticipated, the actual termination of the policy represents a major turning point for financial markets, a point … Continue reading The End is Near
Despite a surprise slowdown of US economic growth in the first quarter, the stock market has continued to climb higher. The S&P 500 is up by over 7% year-to-date. US equity REITs have been especially strong, already returning more than 17% so far in 2014. Meanwhile, the benchmark 10 year US Treasury yield has fallen … Continue reading Mid-Year Summary
Interest rates have moved up this year but are still near historic lows. This is especially true at the front end of the yield curve where people are basically earning nothing on their savings, money market, and even short-term CD accounts (and even losing money net of inflation). Demand from yield-starved investors and the opportunistic … Continue reading No Free Yield
For those living off a fixed income, the current interest environment is, to say the least, quite unsavory. Extending out to 30 years on the Treasury curve only fetches a paltry 3% (and a taxable 3% at that). This has interest-starved investors loading up on junk bonds and leveraging up bond portfolios (risk parity anyone?). … Continue reading Last Yield Standing
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