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…
At its best, an inverted yield curve is a signal from the bond market that the Fed has tightened monetary policy too much, heralding future rate cuts and a sharp slowdown. Anything affecting yields at the long end, however, has…
Highlights The yield curve has inverted: The 10-year Treasury bond yield fell below the 3-month T-bill rate following the March FOMC meeting and has remained there since. We never say it’s different this time, but there is not…
Highlights Duration: None of the economic indicators that have reliably signaled peak interest rates in prior cycles are sending a signal at the moment. This leads to the inevitable conclusion that further Fed rate hikes are likely at…
Highlights Portfolio Strategy Corporate sector selling price inflation is nil while leading wage inflation indicators signal additional labor cost increases in the coming months. The risk is that profit margins have already peaked for…
As implied by the overnight index swap (OIS) curves, the money market now expects that the Fed Funds Rate has peaked at 2.5%, and that a rate cut will likely bring it down to 2.25% by the end of 2020. Our U.S. Investment Strategy…
Highlights Chart 1Track The CRB/Gold Ratio Earlier this year the Fed signaled a dovish policy shift in response to slowing global growth and tighter financial conditions. In large part due to the Fed’s move, financial…
Highlights Chart 1Look For Rate Hikes In H2 2019 First things first: The Fed’s rate hike cycle is not over. Last week’s FOMC statement told us that the Fed will be “patient” and Chairman Powell cited…
The hiatus in the Fed’s rates-normalization policy in 1H19 in the wake of its capitulation to financial markets, supports our bullish view on gold prices, as it raises the risk of an inflation overshoot later this year. Per the Fed…