Interest Rates

GDP growth of 4.0% projected for 2004. Improved 2004 budget deficit projections a short term positive for bonds but eventually could be a negative.

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It now seems that the market has settled into a comfort zone— or put differently— a trading range that reflects investors’ current lack of conviction about prospects for the second half of the year.

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Steve's Half Time Report: A recap of the year so far, and our outlook for the second half of 2004.

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GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit ($507 billion in 2004?) is a significant problem for bonds.

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What might the Fed view as a neutral position? Assessing historical yardsticks for guidance.

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GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit ($483 billion in 2004?) is a significant problem for bonds.

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There is a clear lack of attractive options in fixed income and we are increasingly skeptical about the REIT markets, as premiums and new offerings are at or near peak levels. Industrial Metals still offer outstanding opportunity.

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The spread between Long Quality Corporates and twenty year Treasury bonds is back down to a normal level, as the Treasury shortage elimination-thesis has fallen apart due to rising budget deficits.

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GDP growth of 5.0% projected for 2004 (6% in the first half, 4% in the second half). But, fast growing U.S. budget deficit ($475 billion in 2004?) is a significant problem for bonds.

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This month’s “View From The North Country” presents data showing periods where interest rates (both long T-bonds and 90 day T-bills) rose and stocks also rose. It can happen!

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Fast growing U.S. budget deficit ($374 billion in 2003) is a significant problem for bonds. Project 2004 budget deficit will expand to $535 billion.

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GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit is a significant problem for bonds.

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Economy picking up steam in second half. Early Q3 GDP estimate much better than expected.

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Leuthold’s thoughts about a potential near-term bull market correction, the current budget deficit, and observations on the political front.

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Economy picking up steam in second half. Revised Q2 GDP better than expected.

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GDP growth of +4.0% projected for 2003. But, fast growing U.S. budget deficit is a significant problem for bonds.

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Fixed income hedge in portfolios was reduced by one-half in mid-August following the spike in bond yields. TIPS for fixed income investors?…..You can lose money on Treasury Inflation Protected Securities (TIPS). You are protected against inflation but not sharp rise in interest rates.

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High Yield bonds rated marginally attractive after continued spread narrowing.

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“Risk-free bond returns could become return-free risks.” The Leuthold Group has hedged its fixed income position by shorting U.S. Treasuries. May completely hedge entire fixed income exposure later this month.

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Economy will pick up steam in the second half, sustaining the already in progress earnings recovery. Also, Cyclical rally targets and equity leadership going into the second half.

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