Macro Monitor

We still think interest rates are likely to be range-bound, but the range will likely shift higher to the 185-240 bps area if the current breakout is successful.

• Read more

We’re downplaying the new signal’s significance and remain cautiously optimistic towards risky assets near term. Our biggest concern is that a rise is extremely likely going forward. 

• Read more

We think interest rates will stay low for an extended period of time, so the key question is, when will rates start rising?

• Read more

The stock market wealth effect has been direct and pronounced. But it’s been wearing off, with the subsequent rally after each Fed stimulus weaker than the previous one.

• Read more

What is the Fed going to do if another risk event hits and the S&P goes down 15-20%? Pray?

• Read more

The failed break-out to the upside on the U.S. 10-year yield fits our expectation of a range-bound but higher-volatility environment.

• Read more

For central bank policy effectiveness, global economic growth, interest rates, and inflation. While lowered expectations are a good thing in the near term, long term return expectations for most asset classes should be lowered too.

• Read more

We remain optimistically cautious, as we believe the determination of the policy makers to prop up the market should not be underestimated, especially in an election year.

• Read more

How do we avoid volatility in a high Uncertainty/low conviction world? We compare a “bi-modal” portfolio of 50% Treasuries/50% High Yields with a “middle-of-the-road” portfolio of 100% Investment Grade Corporate bonds. The latter wins in both good and bad scenarios.

• Read more

1st half LT rate movements tracked cycle composite well, but we differ on the pattern in the second half. The “muddle through” pattern on the U.S. Composite Leading Indicator is more consistent with our view.

• Read more

This new “Higher Risk” signal closed out the previous “Lower Risk” signal generated last December, and this measure is telling us it’s time to play a little defense.

• Read more

Going forward, at least in the near term, we think a good guide for the potential downside on U.S. interest rates might be the German bund yields.

• Read more

Inflation is still below the Fed’s target and near term pressure is only moderate. This gives the Fed some room to ease further if the economy falters.

• Read more

In the near term, U.S. interest rates are expected to be range-bound, and we remain neutral on the U.S. yield curve. Bond Market Risk Aversion Index fell again in January, and remains on a “lower risk” signal.

• Read more

Bond Market Risk Aversion Index fell in December, resulting in a new “lower risk” signal that closed out the “higher risk” signal which occurred back in May. We are now cautiously optimistic.

• Read more

The Risk Aversion Index edged up during November. It is still on a “higher risk” signal. We will stay defensive and be patient. Higher quality assets within the fixed income space are favored.

• Read more

The Risk Aversion Index fell sharply during October. Despite the sharp drop in the index, it has not fallen enough to generate a new “lower risk” signal. Our take on the current reading  is “wait and see” with a bias towards lower risk.

• Read more

A Risk Contagion is now underway, and we continue to stay defensive and favor higher quality assets within the fixed income space. A silver lining: When the Risk Aversion Index moves above 1, odds start to favor a decrease in risk aversion going forward. The bulk of the move is probably done.

• Read more

As we expected, the U.S. downgrade was digested by the market fairly quickly and attention turned to the economy. This is a bear market in confidence, more than anything else.

• Read more

The new deal reached by Congress has little substance and no impact at all until 2014 or beyond. More “kick the can down the road.” Long term debt/deficit issues remain unsolved.

• Read more