Highlights In the short term, the US stock market price will track the 30-year T-bond price, with every 10 bps move in the yield moving the stock market and bond price by 2.5 percent. We think that the bond market will not allow the…
Highlights Federal Reserve: Market turbulence will not dissuade the Fed from starting to hike rates in March, with longer-term consumer inflation expectations climbing steadily higher. Given the choice of fighting high inflation or…
BCA Research’s US Bond Strategy service concludes that de-rising will be warranted in the high-yield space as the yield curve flattens. However, relative valuations dictate that investors should retain a preference for high…
Highlights Corporate Bond Returns & Fed Tightening: Corporate bond performance varied considerably during the past four Fed tightening cycles. Our analysis of these periods suggests that valuations and the slope of the yield curve…
The sharp climb in US Treasury yields so far this year has sent a ripple through equity markets (see Market Focus). Interestingly, real yields are behind this move. The 10-year TIPS yield is 45 basis points higher since the…
Highlights The bond market assumes that when recent inflation has been high, it will be higher than average for the next ten years. Yet the reality is the exact opposite. High inflation is followed by lower than average inflation.…
Highlights On US inflation and the Fed: If the Fed adheres to its mandate, it has no choice but to hike rates until core inflation drops toward 2% (from its current level above 4%). Yet, share prices will sell off before inflation…
BCA Research’s Global Fixed Income Strategy service’s highest conviction investment recommendation for 2022 is to position for a wider 10-year US Treasury/Germany Bund spread. With markets already priced for…
Highlights US Vs. Europe: Growth and inflation momentum remains stronger in the US versus Europe. The latter is taking the bigger economic hit from more severe Omicron economic restrictions and a greater exposure to slowing Chinese…
Highlights We reformatted and added three sections to our existing trade tables: strategic themes, cyclical asset allocations and tactical investment recommendations. An extensive audit of our current trade book shows that our country…