Yield Curve

Our Portfolio Allocation Summary for August 2024.

Investors hope that the ECB rate cuts priced into the curve will be sufficient to achieve a soft landing in Europe. History argues against this view, but will this time be different?

After this morning’s jobless claims number, we have now seen enough deterioration in our preferred labor market indicators to increase portfolio duration from “at benchmark” to “above benchmark”.

The real threat to European equities is growth, not political risk. How low will Eurozone earnings fall during the coming recession and how much will equities decline in response?

Does the incipient slowdown in European data herald a soft landing and a goldilocks period for equities? We have our doubts.

Our Portfolio Allocation Summary for July 2024.

Concerns about the global economy have shifted from sticky inflation to faltering growth. Tight monetary policy is finally starting to bite. We suggest increasing portfolio defensiveness.

We consider the relative merits of four different fixed income investments in the current economic environment: 2-year Treasuries, 10-year Treasuries, Baa-rated corporate bonds and current coupon Agency MBS.

Our Portfolio Allocation Summary for June 2024.