4 min readAbstract Jerome Powell is the new Chair of the Federal Open Market Committee (FOMC) following Janet Yellen’s retirement from the Fed. In the near-term, Powell is likely to continue on the projected path of gradual interest rate hikes while also focusing on transparency and deregulation. However, as his background is not in economics, he will…
3 min readAs stocks soar to record highs, it seems as though the decline in long bond yields has been endless. Less than a year after the Federal Reserve saw economic conditions sufficient to warrant the first rate hike in almost a decade, rates on long-term U.S. Treasury bonds now lie at near-record low levels (with the…
2 min readAbstract Three C’s – China, commodities and central bank actions – contribute to a slower and shallower path for higher rates Many market pundits continue to argue for one or two rate hikes this year, but most debt investors now accept that the fed funds will return to the normal range of 3-4% over a…
2 min readWhen the Fed increased interest rates for the first time in nearly a decade last December, many cash investors expected multiple additional increases to follow this year. But since early January, capital market participants have been on a rollercoaster ride, buffeted by China’s stock-market meltdown, by collapsing commodity prices, and by other central banks around…
1 min readThe economic backdrop in January 2015 is markedly different from a year ago. The price of oil, the most widely used global commodity, is down over fifty percent and new deflation scares are emerging in Japan and the Eurozone. Even Tom Brady’s footballs are feeling the deflation contagion. Besides the plunge in oil prices, aggressive…
2 min readAbstract Lower oil prices and easier central bank policies outside the U.S. led the market to question the Fed’s timetable for raising interest rates. While both disinflationary and expansionary forces are present, financial markets appear to be focusing on the former, as the latter is still materializing. The net effect may allow the Fed to…
2 min readThis summer, the FOMC’s speeches and official statements have been focused on tapering the pace of the Federal Reserve’s asset purchases. Both the equity and fixed income markets have been hanging on to the Fed’s every word and the markets’ interpretation of the FOMC’s comments have led to a significant sell-off in longer-term yields, while…
2 min readAbstract We do not foresee a meaningful rise in short-term interest rates even as the Fed may begin tapering bond purchases. The fed funds rate, the key factor affecting short-term rates, likely will not start to rise prior to mid-2015. Investors should continue to look for opportunities further up the yield curve with separate account…
3 min readAbstract The almost comical sounding term “Operation Twist” has been creeping into the financial media since last December as Federal Reserve officials and market commentators discussed innovative ways to revive the stagnant economy. This phrase became a household name on September 21st, when the Federal Open Market Committee (FOMC) decided to simultaneously buy $400 billion…
1 min readAgainst a backdrop of declining US growth projections, all eyes were on the Fed last week as they considered new policy initiatives designed to impact the cost of borrowing. Under consideration was the QE3 balance sheet expansion, as well as more politically palatable options, such as reducing the interest rates paid on excess reserves held…