Highlights Chart 1Contagion?  Until last week, global growth weakness had been wholly confined to the manufacturing sector. But the drop to 52.6 in September’s Non-Manufacturing PMI (from 56.4 in August) raises the…

Highlights Corporate Bonds: High corporate debt levels will be a problem for corporate bond investors during the next downturn, but spreads will not respond to them until inflationary pressures mount and monetary policy turns…

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 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 Corporate Spreads: The Fed’s dovish pivot prolongs the period of time before the yield curve inverts, thus extending the window for corporate bond outperformance. Investors should remain overweight corporate bonds,…

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 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…

Highlights Chart 1What’s The Downside?  How low can it go? This is the question most investors are asking these days about the 10-year Treasury yield. Our answer is that it can’t go much lower unless the U.S. economy falls…