Author: Matthew Paniati

Matthew Paniati joined Capital Advisors Group in 2015. He initially supported the Portfolio Management team as an Assistant Portfolio Manager before transitioning to the Research team in 2017.
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What Would a Second Trump Term Mean for the Fed?

7 min readIn April, The Wall Street Journal reported that former President Donald Trump’s advisory team has been drafting proposals that could potentially alter the structure of the Federal Reserve, in the event he is elected for a second term. The former President’s team has yet to publicly confirm the existence of such plans, but the reporting…

Negative Rates are No More, But The Era of Big Central Banks Reigns Supreme

Negative Rates are No More, But The Era of Big Central Banks Reigns Supreme

7 min readIntroduction The Bank of Japan’s (BOJ) meeting last month was perhaps the most consequential central bank meeting of the entire year. The BOJ raised interest rates by 10 bps  to 0-0.10%, all-in-all a small amount in magnitude.  However, this marked the first interest rate increase by the central bank in 17 years. Moreover, it marked…

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Tightening Financial Conditions May Cause Us to Lose Circulation

16 min readCo-Authored by Pate Campbell, Analyst CFA  Managing the Risks Posed by Tightening Financial Conditions DOWNLOAD REPORT Executive Summary Financial conditions are tightening, primarily as a byproduct of the Fed’s interest rate hiking cycle. This portends that households and businesses may be less supportive of economic growth than they have been in the post-Covid period. Households…

Where is the Neutral Rate?

Where is the Neutral Rate?

9 min readCould potential changes in the economy from the end of the Fed’s tightening cycle lead to a higher neutral rate? Introduction With the Federal Reserve System (the “Fed”) nearing the end of its tightening cycle, the question for investors has shifted to whether rates can truly remain “higher for longer”, to quote the current in-phrase…

Investing in the European Bank Debt Markets

Investing in the European Bank Debt Markets

6 min readWhat happened with Credit Suisse and what cash investors may be able to take away from the experience. Amidst the recent turmoil in the banking system, investors have taken a renewed interest in their bank debt holdings, particularly in the case of Credit Suisse. In a highly unusual move, regulators flipped the established creditor hierarchy…

Liquidity Isn’t Guaranteed

Liquidity Isn’t Guaranteed

7 min readThe History of the Fed’s Quantitative Tightening (QT) and its current standing The Fed’s history with Quantitative Tightening (QT) is both limited and perilous. Its only prior experience with Quantitative Tightening in 2018-2019 ended in disaster, when funding markets locked up in September 2019 due to a lack of available liquidity. This episode is infamously…

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Interest Rate Update

2 min readCo-authored by: Pate Campbell Economic News The December Employment Report revealed a decline in the unemployment rate to 3.5% from 3.7% while 233K jobs were added to non-farm payrolls. Despite ongoing tightness in the labor market, average hourly earnings grew at 0.3%, slower than the rate in previous months. Lower hourly earnings growth not only…

Shifting Tides: Inflation and Recession Risk

Shifting Tides: Inflation and Recession Risk

8 min readInflation and recession, two words on the top of every investor’s mind right now. In our recent post on Inflation Winners and Losers, we talked about how the near-term outlook for inflation is relatively entrenched. This matters because the Fed has thrown the weight of its credibility on reducing inflation, raising interest rates aggressively since…

LIBOR No More

LIBOR No More

6 min readLIBOR entered its next phase on January 1st, 2022. The date marked when no new financial contracts could be priced off LIBOR, which underpinned more than $200 trillion in loans , contracts, and derivatives as of the end of 2020. LIBOR (the London Interbank Offered Rate) will still be published as a reference rate for…

Past Mistakes Haunt Fed’s Inflation-Fighting Plans

Past Mistakes Haunt Fed’s Inflation-Fighting Plans

9 min readThe Fed shifted its policy stance radically at its December meeting, increasing the pace of its reduction in asset purchases and pushing up the timeline for rate hikes. This move was a culmination of policy being out of sync with the state of the economy, as it was extremely accommodative even with above target inflation…