Macro Monitor
Losing Confidence In Washington But Not U.S. Treasuries, At Least Not Yet
The inability of our politicians to recognize and resolve short and long term debt/deficit issues has caused many of us to lose even more confidence in Washington.
It’s The Economy, Stupid
U.S. likely averted worst-case scenario of default, but credit rating downgrade is still likely. Main impact of downgrade is not the increase in interest rates itself, but rather the liquidity risk in all markets that involve treasury securities as collateral.
Longer Term Concerns About U.S. Debt And Deficit
$4.8 trillion of the additional $9 trillion in debt that Uncle Sam is expected to incur over the next decade is interest obligation.
Risk Aversion Index Says “Wait And See”
The Monthly Risk Aversion Index edged down slightly in June, pausing for a clearer direction. The biggest contributors of risk are commodities and credit spreads.
Now Entering Increasing Risk Aversion Environment
Risk Aversion Index accelerated in May, making it prudent to favor defensive assets near term. Expect small and gradual increase in long term interest rates.
Longer Term Concerns About U.S. Debt And Deficit
More than one-half of the U.S. government’s additional $9 trillion in debt expected over the next ten years is projected to be interest. This is a frightening proposition.
The Bond Bubble Is Beginning To Deflate… Is This Cheap Money Era Ending?
An orderly decline of the dollar is not necessarily a big concern. On the other hand, a sudden collapse of the dollar, in conjunction with spiking U.S. interest rates, would be a terrible thing. So far this has not been the case.
The Bond Bubble Is Beginning To Deflate… Is This Cheap Money Era Ending?
Long term interest rates could continue rising, as inflation expectations increase and investors demand higher yields.
Monthly Risk Aversion Index (RAI)
This month’s “Inside The Bond Market” presents our new “Risk Aversion Index,” which was developed by Chun Wang to respond to those factors that the bond market is truly worrying about. The Index examines ten factors on a monthly basis to help best position a bond portfolio.
The Bond Bubble Is Beginning To Deflate… Is This Cheap Money Era Ending?
Bond bubble deflating, as investors demand higher yields to compensate for rising inflation and mountain of debt.
The Bond Bubble Is Beginning To Deflate… Is The Cheap Money Era Ending?
The bond bubble is deflating, as investors demand higher yields to compensate for expected rising inflation and the U.S. mountain of debt.
The Bond Bubble Is Beginning To Deflate… Is The Cheap Money Era Ending?
We raised most of our twelve month yield targets this month, based on higher inflation expectations and U.S. debt concerns. Extremely low yields at the short end of the curve are the result of a stimulative Fed policy. Rising yields at the long end of the curve reflect rising inflation expectations.
Tips On TIPS (Treasury Inflation Protected Securities)
TIPS can serve a useful purpose in investment portfolios by protecting purchasing power and diversifying risk. But at current low yields and falling bond prices, they do not offer very substantial returns, unless there is an unexpected surge in CPI inflation over the life of the bond.
Bonds Versus Stocks… A Simple Comparison That Shows There Is No Comparison
Stocks win the bonds versus stocks comparison.
Is The Bond Bubble Beginning To Deflate?
The bond bubble could be deflating, as investors demand higher yields to compensate for expected rising inflation and the U.S. mountain of debt.
Is The Bond Bubble Beginning To Deflate?
Bond bubble continues to inflate, much like money pouring into tech stocks at the height of the internet bubble.
Longer Term Concerns About U.S. Debt And Deficit
The kneejerk reaction to worries about excessive sovereign debt has been to bail out of the European sovereign debt and pile into U.S. sovereign debt. Unless the U.S. can get its own fiscal act together, we may face this same panic reaction farther down the road.
Are We In A Bond Bubble?
Bond bubble continues to inflate, much like money pouring into tech stocks at the height of the internet bubble.
Longer Term Concerns About U.S. Debt And Deficit
The kneejerk reaction to worries about excessive sovereign debt has been to bail out of the European sovereign debt and pile into U.S. sovereign debt.
Longer Term Concerns About U.S. Debt And Deficit
A mountain of new debt, a balloon of short term borrowing due near term, and the likelihood of higher interest rates are big hurdles.
Perception for the Professional
March 2026 Issue
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March 2026 Issue
