5 min readThe interest rate blues are well in effect. For those with enough foresight to see this coming (and thus to load up on long-duration Treasury bonds) it has been an absolute riot. For the rest of the fixed income investment community, it’s been a bit of a bloodbath. Figure 1: Yield Curve Source: Bloomberg Over…
5 min readThis past week saw some nearly unprecedented chaos in repo markets. Beginning late Monday and extending into Tuesday morning, funding in overnight cash markets essentially dried up, sending investors scrambling for liquidity. This resulted in a surge in repo rates for those who did transact, with overnight rates jumping from the low-to-mid 2% range to…
3 min readToday, the Federal Open Market Committee announced a 25 basis point cut in the overnight fed funds rate to a range from 1.75% to 2.00%, the second such action this year. In a normal week, building anticipation for the Fed’s policy decision and press conference would typically dominate the markets, but turmoil in the repo…
7 min readAs a registered investment advisor whose sole focus is on cash investments, Capital Advisors Group has a very clear mission: to make sure the strategies we develop for our clients comply with their investment policies, risk tolerance, and current business situation. Under the Investment Advisers Act of 1940 which governs SEC registered investment advisors, we…
2 min readWhen a multi-billion-dollar rate-fixing scandal in 2012 undermined confidence in LIBOR as the standard global benchmark for interest rates on short-term debt, regulators from the U.S. and U.K. started searching for a suitable replacement. A lot was riding on the choice: more than $200 trillion in floating-rate bonds, derivatives contracts, securitizations, and loans around the…
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…