8 min readDOWNLOAD FULL REPORT Abstract The era of LIBOR (the London Inter-Bank Offered Rate) is coming to an end. The rate, which underpins some $200 trillion in floating-rate bonds, loans, securitizations, and derivatives contracts, is broken—at least according to the international regulatory community. In the U.S., this has led to the introduction of SOFR (the Secured…
2 min readCo-authored by: Carter Bourassa On Wednesday, August 14th, 2019, the yield curve inverted when the 10-year Treasury note fell below the yield of the 2-year note. Equity markets dipped in reaction, with the three major indexes all suffering losses of more than 2.9%. Yield curve inversions are among the more reliable recession indicators; Credit Suisse…
2 min readThe fallout from the ongoing U.S. and China trade war continues to impact both countries and may be contributing to global weakness. Chinese economic growth fell to 6.2% in the second quarter, the lowest level since record-keeping began in March of 1992, as the value of the country’s exports to the U.S. dropped by 8.2%…
6 min readIntroduction The President of the ECB, Mario Draghi, recently performed an about-face on the direction of interest rates. After having previously announced plans to begin raising interest rates out of the negative range, Draghi altered course significantly, stating that rates will likely remain negative until at least 2021. Negative rates, initially intended to act as…
2 min readChinese President Xi Jinping and U.S. President Donald Trump agreed to resume trade negotiations ahead of the G20 summit last weekend, with the U.S. granting a reprieve on certain Huawei restrictions and on further tariff increases. China agreed to buy additional American agricultural goods in exchange. Stock markets surged on Monday in reaction to the…
2 min readTrade Dispute Escalation The apparent lack of progress in U.S.-China trade negotiations stoked volatility in the financial markets in early May. On Friday, President Trump imposed 25% tariffs on $200 billion of Chinese goods with China responding in kind on $60 billion of U.S. goods. And just this morning, Trump targeted Chinese telecom giant Huawei…
5 min readBrexit has been delayed until Halloween, a fitting deadline for what has turned into a three-year nightmare for the British populace. UK Prime Minister Theresa May had pushed for a shorter extension, out until the end of June, in hopes that the UK would not have to participate in the upcoming EU elections. However, it…
2 min readOverview The FOMC concluded its two-day meeting on Wednesday, May 1st and, as expected, kept the fed funds target range unchanged at 2.25-2.50%. Echoing its comments in March, the Fed expressed comfort with their current “wait and see” approach to monetary policy. The equity markets declined slightly as Fed Chair Powell attributed the weakness in…
5 min readWhen the Bureau of Labor Statistics reported early this month that non-farm employment rose by only 20,000 jobs in February—a huge miss from consensus estimates of about 175,000 new jobs—it threw many observers for a loop. Was the low number an indicator of a slowdown in growth? Or could it be written off as a…
2 min readWith a March 29th deadline looming for the UK to leave the European Union, there is still no decision about how the departure will be managed. In the two years since a popular referendum triggered the Brexit process, negotiations over a deal for a smooth exit have been unsuccessful. Scenarios range from a “hard” Brexit,…