3 min readTariffs & Government Spending Cuts Stoke Stagflation Fears Concern is increasing that global trade tensions along with government spending cuts could lead to slower growth and higher prices if tariffs remain in place. Many economists have recently lowered US growth outlooks. Even commentary from President Trump and Treasury Secretary Bessent signal some pain ahead: Trump…
4 min readYields Declined on Negative Consumer Outlook Treasury yields declined significantly towards the end of February after two consumer survey reports came in much lower than expected. The drops were most significant in the long end, with the 10-year yield declining 33 basis points, while the 2-year yield fell below 4% for the first time since…
6 min readAs President Trump’s administration kicks off its second term, one of its most contentious executive orders—the mass deportation of undocumented immigrants—is already stirring debate. The policy is primarily aimed at widening enforcement of immigration laws, which could have a seismic impact on U.S. macroeconomic conditions. In this blog, we will dissect how the deportation policy…
4 min readMixed Data Keeping the Fed on Hold Fed Chair Powell recently said he wants “to see inflation behaving in a way that builds confidence that we are really making progress.” Unfortunately, the January Consumer Price Index (CPI) did not build any confidence that inflation is decelerating, coming in much higher than expectations. Overall, data releases…
4 min readDespite a Wild January, Treasury Yields Ended Little Changed This past January will be one that many of us will never forget. The month started with massive wildfires in Southern California, the inauguration of President Trump, DeepSeek’s disruption of the technology sector, and the first U.S. commercial airline crash since 2009. At month-end, the markets’…
19 min readIntroduction By Lance Pan, CFA 2024 was a remarkable year for financial markets in many respects. The estimated 2.7% growth in real gross domestic product (GDP) nearly doubled the Federal Reserve’s median projection of 1.4% a year earlier.[1] The S&P 500 stock index rose 23.3% on the heels of an equally impressive gain of 24.2%…
3 min readGovernment Bond Yields Rise Globally The rise in U.S. treasury yields has continued into the new year, primarily driven by 3 factors: A string of solid U.S. releases has continued, with both the ISM Manufacturing & Services reports coming in better than expected, the December nonfarm payrolls beating expectations by nearly 100,000, and the unemployment…
4 min read2024 Recap 2024 saw major central banks begin to ease policy including both the Fed and ECB which each cut rates by 100 basis points. Risk assets had another strong year with the S&P 500 returning +25%, the first time since the 1990s that the index had back-to-back +20% returns. Gold rose over +27%, its…
3 min readFed Speakers Convey Caution on Pace of Rate Cuts Several Federal Reserve officials have echoed a theme conveyed by Fed Chair Powell that the FOMC is in “no hurry to lower rates” and the central bank could slow its easing pace given stronger than expected economic data. For example, year-over-year inflation readings for both CPI…
4 min readEconomic forecasting is oftentimes an exercise in futility. Analysts with access to all the data and the best models can be no more accurate in their forecasts of unemployment and GDP than the average layperson with some conceptual knowledge. Take for instance September’s jobs report, which caught nearly everyone by surprise. Most analysts predicted non-farm…