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- Fixed Income Market Update
March 17, 2023 The market was a rollercoaster the last ten days, in particular the last week. On March 8th the 2-Year US Treasury yield was at 5.07%. By the 13th the yield sank (prices rose) to 3.98%. The note then proceeded to swing by 15-30 bps each day this week! Banking industry revelations, - Fixed Income Market Update
March 13, 2023 Over the weekend, Silicon Value Bank (SIVB) and Signature Bank New York – SBNY were seized by regulators and First Republic Bank (FRC) taped additional liquidity. The Fed and the market listened to our post and took drastic action to stop the run on the banking system. This - Fixed Income Market Update
March 10, 2023 Yesterday SVB Financial (SVB) parent company of Silicon Valley Bank announced they are doing a significant capital raise to cover losses from their portfolio of… Mortgage backed and Treasury Bonds. SVB stock dropped 60%, bonds and preferred issues were down significantly and Moody’s announced a downgrade of the - Fixed Income Market Update
February 24, 2023 Sometimes markets can be clear, and you can see direction for as far as the eye can see. Other times, the vision is hazy, cloudy, or even stormy. Uncertain times make us long for clarity. We regularly run through an exercise to identify the source of the uncertainty - Fixed Income Market Update
February 17, 2023 Markets rarely ever move in a straight line. Neither does inflation or the economy. And that is what we found in the last couple of weeks. After the strong employment report (that many discounted), we had more reports on Retail Sales, the Consumer Price Index and the Producer Price Index. All of these important reports showed: a - Fixed Income Market Update
January 24, 2023 Take a look at the yield curve chart below. The gold line is the curve on October 24, 2022 (The day the yield on the 10-Year US Treasury hit its most recent high), the green line is January 18, 2023. Since that point in October, the curve has twisted - Fixed Income Market Update
January 13, 2023 Investing in fixed income is all about hierarchy. At the top are US Treasuries. They are the safest, most liquid fixed income investments in the market. Every other fixed income security trades off where the corresponding US Treasury issue is trading. That is for good reason, if you can buy a - Fixed Income Market Update
January 6, 2023 Fixed income ended 2022 on a negative note. With the October and November CPI prints showing disinflation, the markets anticipated a more dovish Fed. However, the Chairman was resolute, and bond markets dropped as yields rose. So where do we stand after improving inflation reads in Europe and the US? - Fixed Income Market Update
December 16, 2022 With another good CPI report in the hopper, the market continued the relief rally it started when the October CPI report was released. There was plenty of good news on the inflation front, month over month was only up 0.1% and Ex Food and Energy was up only - Fixed Income Market Update
December 9, 2022 The bond market can be a pretty good forecaster. Looking back over the last 50 years, it’s been very good at forecasting recessions. The track record? Seven for seven. And the crystal ball it uses to do this prediction? The yield curve, specifically an inversion of the yield curve. The - Fixed Income Market Update
December 2, 2022 Is the Fed finally Relenting? In a speech at the Brookings Institute, Chairman Powell laid out the Central Banks’ current thinking on the economy, rates and the path forward. In the speech, littered with caveats, the Chairman said what the market expected, and needed. The Fed is thinking of relenting. After - Fixed Income Market Update
November 4, 2022 Wednesday afternoon the Fed Statement came out and it seemed, reading between the lines, that perhaps the Fed was changing their tune (Dare we say, Relenting?). As the market breathed a sigh of relief, the press conference started, and we found out Chairman Powell and the Fed are - Fixed Income Market Update
October 28, 2022 The fixed income markets are abuzz with the potential of a Fed Pivot, or the idea the Fed might change from hiking to pausing to cutting. We say, will the Fed just relent? The Fed, focusing on not repeating the mistakes of the 70’s, is quickly raising rates to a - Fixed Income Market Update
October 14, 2022 It’s an old saying and it’s hard to refute. Can you have your cake and eat it too? Sometimes in the fixed income markets, the answer is yes you can. Each day, the market shifts, rates change, and laws and regulations get passed. While these changes present challenges to some, - Fixed Income Market Update
October 7, 2022 Paul Volcker was Chairman of the Federal Reserve Board of Governors from 1979 through 1987. He and his board are widely credited with curbing the high rate of inflation in the late 70’s and early 80’s. He accomplished this by raising the overnight fed funds rate to a level - Fixed Income Market Update
September 20, 2022 The home of the Federal Reserve Bank is on Constitution Avenue in Washington, DC. That’s just a few blocks away from our headquarters so we speak from experience when we say: As the Fed considers a historic third 75 basis point increase, it’s quiet on Constitution Avenue. FOMC participants - Fixed Income Market Update
September 9, 2022 Let me start by expressing our condolences to the Royal Family and the English people for the loss of their monarch, Queen Elizabeth II. She oversaw tremendous change during her 70-year reign, much of it brought on by major discoveries in physics, chemistry and technology. Consider the impact of - Fixed Income Market Update
September 2, 2022 Short and to the point. That’s how Chairman Powell’s annual speech was described. Not known for his brevity, and expected to speak for thirty minutes, the Chairman spoke for a little over eight minutes and the message was clear. Expect higher rates, for a longer period, potentially causing economic - Fixed Income Market Update
July 1, 2022 We said it, the Treasury Secretary said it, and even the Fed Chair has said it, the Fed is behind inflation and needs to do historic interest rate increases to catch up to inflation. But given the potential of another 75-bps increase, the downturn in some commodities and - Fixed Income Market UpdateJune 17, 2022 Friday the Bureau of Labor Statistics reported the May inflation numbers and they didn’t show any improvement. We have been in this above 4% inflation environment for over a year, and this latest print of 8.6% is the highest since December 1981. So it’s a good question
- Fixed Income Market UpdateJune 10, 2022 Earnings season and investor days always make for great sound bites. No one is better at this than Jamie Dimon at JP Morgan. His wonderful headline: “You know I said there’s storm clouds, but I’m going to change it… it’s a hurricane” Jammie Dimon, JP Morgan Analyst Day But
- Fixed Income Market UpdateMay 27, 2022 What a difference a week makes. Markets shrugged off the higher rate fears, shook off the recession worries and got down to buying. From last Thursday, May 19th through yesterday May 26th, many Bloomberg fixed income indices rallied strongly. Led by the High Yield Index up 2.80%,
- Fixed Income Market UpdateMay 20, 2022 It’s been a record year in fixed income. Just not the kind of record we want to be setting. But with all the increases in rates, worries about recession and the volatility brought about by both, we believe there is good value in some areas of fixed income. This
- Fixed Income Market UpdateApril 29, 2022 As we mentioned last week, over the next year, we think there are three scenarios for the economy and the fixed income market. All three scenarios hinge on the trajectory of inflation. Inflation is either going to peak and cool off, or it’s not peaking or cooling off. If it’s
- Fixed Income Market UpdateApril 22, 2022 It’s been a dreary time in bond land. It seems every day the market just grinds continually lower, wearing on minds, emotions, and portfolios. This was supposed to be the capital preservation part of the portfolio, right? And didn’t the Fed just start raising rates? If we believe the futures market,
- Fixed Income Market UpdateApril 1, 2022 There are many advantages to investing in bonds, but one of my favorites is the ability to forecast the future. I’m not talking about if economy is going into a recession or if the Bengals are going to win the Superbowl, I’m saying given a set of
- Fixed Income Sector Review
Written by Peter Baden, CFA, Chief Investment Officer In case the market didn’t hear him at his press conference last Wednesday, Jerome Powell, the Acting Federal Reserve Chairman, gave a very clear speech on Monday at the 38th annual NABE Economic Policy Conference. One early quote: My colleagues and I are acutely - Are We Inverted Yet?
Written by Peter Baden, CFA, Chief Investment Officer The much anticipated day came and the Fed, once again, did not disappoint. Wednesday, March 16th is the start of the next interest rate cycle. By raising the Overnight Fed Funds rate by 25 basis points, to a range of 0.25-0.5% the Fed is no - Wall of Worry
Written by Peter Baden, CFA, Chief Investment Officer As we count the worries on investors’ minds, we can understand the move to reduce risk. Top of the list of worries: A war, worse, a war zone that includes nuclear power plants, in Europe. Next, The decoupling of the Russian and Ukrainian - War vs. Inflation
Written by Peter Baden, CFA, Chief Investment Officer Fixed income markets absorbed a lot of information this week, Inflation, Fed participant speeches and a war in Europe. Of the three Inflation concerns won out. The yield on the 10 year US Treasury started the week at 1.931% and as of this writing