Highlights Chart 1Waiting For A Manufacturing Rebound The 2015/16 roadmap is holding. As in that period, the ISM Manufacturing PMI has fallen into recessionary territory, but the Services PMI remains strong (Chart 1). As is…
Highlights Chart 1Keep Tracking The CRB / Gold Ratio The Fed cut rates by 25 basis points last week, a move that Chairman Powell described as an “insurance” cut meant to counter the risks from trade tensions and…
Highlights Monetary Policy: The Fed’s message to markets is “lower for longer” until inflation expectations are re-anchored. But that guiding principle will manifest itself in only a 25 bps rate cut this month. Beyond…
Highlights Chart 1Looks Like 2016 & 1998 The Treasury market continues to price-in a recession-like outcome for the U.S. economy, embedding 83 basis points of Fed rate cuts over the next 12 months. But last week’s…
Highlights Chart 1Bond Rally Supports Stocks Financial markets are pricing-in an intensifying global growth slowdown, but not all assets are responding equally. U.S. Treasuries have rallied strongly, while equities and credit…
Highlights The Federal Reserve’s monetary policy stance is slightly accommodative for the U.S., but it is too tight for the rest of the world. Inflation is likely to slow further before making a durable bottom toward year-end.…
Highlights Corporate Bonds: Corporate bond spreads have been slow to price-in the escalation of the U.S./China trade dispute. Nimble investors should take steps to mitigate their near-term (0-3 month) exposure to credit spreads, but…
Highlights Chart 1Is Low Inflation Transitory? Persistent /pə’sıst(ə)nt/ adj. If inflation runs persistently above or below 2 percent, then the Fed would be forced to adjust its policy stance to nudge it back towards…