The sell-off in US Treasury bonds reversed over the last week with the 10-year bond yield dropping from its intraday high of 1.75% on 18 March. The decline was driven principally by falling real yields as inflation expectations were mostly stable. There was also a reversal in the recent outperformance of value stocks relative to growth stocks.
Has the Fed Turned Hawkish by Allowing Bond Yields to Surge? It seems happy to let financial market conditions tighten. Surging yields on U.S. government debt are tightening financial market conditions, but the response to this from Federal Reserve Chairman
Tension on bond yields mounted over the week as investors began to fear a strong economic rebound might fuel inflation. The $1.9 trillion stimulus plan in the US could cause some sectors, like commodities, to overheat.
In January, the US Federal Reserve affirmed its commitment to low interest rates for a prolonged period of time under its new monetary policy framework. If anything, with its renewed focus on “broad-based and inclusive” maximum employment and a goal of achieving inflation that averages 2% over time, the …
In the US, reflation on the back of fiscal stimulus and the exit from lockdowns should lead to modestly higher inflation expectations and nominal bond yields. A renewed ‘taper tantrum’ looks unlikely as excess capacity and high unemployment rates will prevent …
The success of the Federal Reserve’s emergency intervention in March 2020 played a crucial role in stabilizing and improving liquidity in U.S. credit markets. The cessation of the Fed’s corporate credit facilities, in our opinion, lowers the risk of unintended imbalances within credit markets that could potentially …
It really is different this time. While this is not the first pandemic the US has faced, our reaction to it — the restrictions placed on portions of the US economy, and the policy response — are truly unprecedented. First, there are lots of reasons to be optimistic about the US economy over the longer term. Official productivity statistics likely understate the impact of innovation …
Markets | December 2020 Seek income in credit products. The US Federal Reserve’s aggressive response to the coronavirus pandemic has driven yields on safe-haven debt to near zero, leaving “low-risk” portfolios increasingly susceptible to interest rate-driven price volatility. We believe
T. Rowe Price Insights on Global Markets Our portfolio managers see selective potential in a range of asset classes. Even for those of us who saw reasons for hope this past spring, the market’s resilience in the face of the
Market GPS Chairman Jerome Powell recently introduced the Fed’s new monetary policy strategy with a renewed commitment to achieving an average inflation target. The policy will require allowing infl ation to run above 2% to make up for persistently missing
Global & Absolute Return Fixed Income For Professional Investors in Switzerland or Professional Investors as defined by the relevant laws Key takeaways: ■ The outcome of the US elections has reduced hopes of a large fiscal package being passed next
“The ultimate shape of either candidate’s infrastructure plan would depend heavily on the balance of power in the Senate.”
US Election Preview: All or Nothing The polls say Biden is the favoriete: With little time to go until the election, Biden has a substantial edge over Trump in the national polls, of around 10 percentage points. Biden has led
Spotlight In early-September, the US Federal Reserve Chair Jerome Powell announced a shift in the inflation containment policy regime that had been in place since the 1970s. Recall how, facing rapidly rising and eventually double-digit inflation, then Fed Chair Paul
European Gazette / Summer 2020 It’s been a tumultuous time for investors everywhere. Momentum is the key when looking at future prospects for stock markets and employment prospects across the continent Europe is now more than half a year into
Key takeaways Fed shifts policy to accept inflation above 2% target “for some time” Historic shift is unlikely to generate higher US inflation in the near term Key US inflation drivers not pointing to higher prices, despite COVID-19 stimulus
This spring, investors experienced one of the most volatile periods in modern market history. The speed with which financial markets sold off in March, and then rallied following unprecedented steps by the US Federal Reserve (Fed) and the US Treasury,
Monthly Op-ed The recent dataflow is consistent with our base case: the world’s economy is not experiencing a “V-shape” recovery, but rather is following a “swoosh” trajectory in which after an initial spectacular rebound, growth slows. Focus is again on
Miners Remain Undervalued Despite Gold’s Run The strong gains of July carried on to early August. Gold reached an all-time high of $2,070 per ounce on 6 August amid U.S. dollar weakness and new lows in treasury yields. Gold then
The Fed announced an inflection of its long-term objectives by making the 2% inflation threshold not a high limit, but an average objective over time, i.e. it will not harden not its monetary policy in the event of one-off inflation
Most U.S. Treasury yields increased modestly last week, led by longer maturities. The Federal Reserve (Fed) disappointed investors, as it did not expand long-duration asset purchases as some had hoped. The …
Last week started off on a strong note, helped by news on Monday of Gilead Sciences’ USD 21 billion acquisition of Immunomedics and chipmaker Nvidia’s USD 40 billion purchase of ARM Holdings. Software giant Oracle reported on …
Market Flash All eyes were on central banks. As expected, the Fed left its rates unchanged. It even said they would not move until inflation rose above 2% and stayed there for some time, a situation it does not expect
Key points The divergence between a decisive Fed and a more hesitant ECB is an interesting debate but it hides the fact that on both sides of the Atlantic monetary policy through its traditional transmission channels is facing diminishing returns.
#37 Next week, a lot of webinars are coming up. For example, on Tuesday Jupiter AM hosts a webinar about “The Great Inflation Debate“, on Wednesday UBP hosts a webinar on “Small Caps Specialties” and on Thursday Krane Shares hosts
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
The Federal Reserve today announced an important change in its framework for conducting monetary policy in order to achieve its “statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” One of the main
Global Fixed Income Strategy In November 2018, the US Federal Reserve (Fed) announced that it would conduct a broad review of its monetary policy framework. The new framework will likely shape monetary policy in …
The bad news on the pandemic front in Europe are offset to some extent by the recent experience on the other side of the Atlantic. There, in the late spring hotspots, the propagation of the virus has been curbed again
Examining the resiliency of US government securities repo and clearance settlement in Q1 2020 The volatility between late February and early April 2020 was the largest stress event international capital markets have witnessed since the 2007-2009 global financial crisis. Unlike
Aggressive interest rate cuts, liquidity provisions and quantitative easing worked well. Buying facilities rather serve as a backstop. Based on a diminishing marginal effect from Large Scale Asset Purchases (LSAP), the Fed might do more for longer to support
Fixed Income Asset Allocation Insights Rising from incredibly low levels, improving economic data that suggest the imminent start of a recovery drove a sustained rebound in most fixed income asset classes in June. Markets remain highly dependent on the …
Research & Strategy Insights What is natural language processing, and how can we use it to analyse FOMC minutes and the Beige Book? Until recently, quantitative economic analysis has been mainly based on the study of hard data and survey
Webinar – Morning Espresso Join us for a lively discussion with Joseph Cantwell, Co-Head of the Global Fixed Income Group at MacKay Shields, PM of Nordea’s US Corporate Bond Strategy. He will discuss how the unprecedented move by the Fed to support
Credit Continuum Monetary stimulus measures and high levels of cash continue to support spread tightening between now and year end. The rally in credit markets has continued in May given Federal Reserve and European Central Bank support measures and the
Weekly Fixed Income Commentary U.S. Treasury yields ended the week only slightly lower, masking the week’s volatility.1 Rates rose early in the week, led by longer maturities, when the Federal Reserve (Fed) announced it would begin purchasing individual corporate bonds.
Central Banks: interest rates near zero The Fed kept its interest rates unchanged. The ECB kept its interest rates unchanged. No movement on BoJ interest rates since 2016.
Research & Strategy Insights The European Commission “doubled down” on the Franco-German initiative and came out with a bigger quantum for its “Next Generation” package and proposals for new “own resources”. This is politically important. While we are still very
Research & Strategy Insights While the market is understandably more sensitive to the newsflow around a potential vaccine than to economic data, we still focus on the “background noise” which is likely to accompany the mechanical rebound …
The week before the Memorial Day holiday began with two high profile appearances from Federal Reserve (Fed) Chairman Jerome Powell, starting off with an interview on CBS’ 60 Minutes and followed up with testimony on Tuesday before the Senate Banking,
Investment Insights – Q&A In this Q&A, Capital Group fixed income investment director James Blair discusses the characteristics of emerging market debt, how investors could approach investing in the asset class and the US Federal Reserve (Fed)’s policy response to
White Paper Rising Stars in a New (Fed) World Recent unprecedented action by central banks, notably the Federal Reserve on April 9th, has helped markets recover meaningfully. This has caused many investors to wonder, “What do we do next?” or,
#20 – Top Five Best Read Research on OpinioPro And it’s Saturday again: the day for us to publish our Top Five Best Read on OpinioPro this last week. Populair tags were ‘asset allocation‘ and ‘equities‘, furthermore our event calendar
#19 – Top Five Best Read Research on OpinioPro What research was read the most on OpinioPro this past week? Hereby a top five overview: On the fifth place: the CIO View by DWS: “Corona and Talf 2.0 – New
Rates in lockdown for longer With the outbreak of the coronavirus hitting the global economy, central banks have stepped up to the plate by delivering significant amounts of easing. Official yields are now at or below zero for all developed
Short Note US Fed As had been widely expected, the FOMC, the decisive body of the US Fed, left monetary policy and thus also interest rates unchanged at the meeting that ended yesterday. The latter will not change anytime soon,
While the market has staged a spectacular and unanticipated rally, looking at the broader indices can be somewhat misleading. Year-to-date, the S&P 500 Index is still down -15%, but large cap tech and healthcare indices are down 3% or less.
For the first time ever the Fed will be aggressively buying corporate bonds This significantly reduces the main market risks, such as: Liquidity risk Risk of funds’ closures Refinancing risk Fallen angel risk And it is ready to do more.
Investing Strategy Commentary Health Policy Remains the Key Aggressive action by the Federal Reserve has helped restore some liquidity and animal spirits to financial markets, while fiscal policy is starting to kick in despite cumbersome transmission mechanisms in some cases.
Week Ahead Focus: ECB, Eurozone Q1GDP and Inflation, US Fed and Q1 GDP In the current environment, central banks are not waiting for scheduled meetings to make decisions, which reduces the importance of these meetings. For example, since the last
