A look at recent trends in the U.S. economy suggests that the potential U.S. growth rate is declining. The first reason for this conclusion is that investment has been so weak recently, which means the country’s capital stock has been … Continue reading
Posts By: D. William Kohli
With the automatic spending cuts, or sequestration, required by the Budget Control Act of 2011 still on track to go into effect starting Friday, March 1, we believe it’s important to keep the full impact in perspective. Even if we … Continue reading
It appears that the effects of the major deleveraging event in 2008 — punctuated by the collapse of Lehman Brothers — has finally shifted into a second phase. For the past four years, fixed-income investors have been influenced primarily by … Continue reading
While the European Central Bank has made progress, we believe, on managing near-term liquidity risk, long-term structural issues remain.
The level of market distress surrounding global macro risks has declined in the latter half of 2012, helping sentiment and trading conditions in fixed-income markets return to more normal levels similar to those seen before the 2008 financial crisis.
Since the 2008 market dislocation, fixed-income investors have been prone to anticipate another major macroeconomic crisis, but there are signs developing that macro risks may be easing and more normal market conditions are taking root.
The Fed has taken extraordinary measures since 2008 to help keep long-term interest rates low through two rounds of quantitative easing, known as “Operation Twist,” followed by a third round of easing that targets the mortgage-backed securities market. Continue reading
The U.S. dollar appears relatively stable in a world of structural imbalances.
Despite the uncertain macroeconomic environment, we continue to believe that a strategy that relies on rates declining further to drive returns is a risky proposition. At current levels, interest rates would not have to increase much in order for investors … Continue reading