Why low oil prices may last

Why low oil prices may last

Oil prices are often volatile, but we see some longer term factors at work on both the supply side and the demand side of energy markets.

Inflation likely to pressure the Fed

Inflation likely to pressure the Fed

The most pressing issue for global markets for the remainder of the third quarter will be the mounting challenge for the U.S. Federal Reserve to keep reinforcing its “optimal control” framework in the face of higher inflation data. Striking the right balance The Fed has a dual mandate under the law: to pursue policies that

Like the weather, the economy should warm up

Like the weather, the economy should warm up

The polar vortex that spread across great swaths of North America several times this past winter numbed economic data. One way to understand the impact of winter is to analyze heating degree days. These calculations measure the energy consumption required to heat buildings and appear on the monthly utility bills of many homeowners. Based on

Japan’s reforms face moment of truth

Japan’s reforms face moment of truth

Regarding Japan, we have expressed optimism in recent quarters about the potential economic gains from Prime Minister Abe’s reform program. In 2013, the government and the Bank of Japan unleashed a combination of expansionary policies focused on stimulating economic activity and weakening the yen to give Japanese exporters greater global competitiveness. Results so far have

Three reasons this credit cycle may be lasting

Three reasons this credit cycle may be lasting

Today, more than four years into the recovery, capital market opportunities are shifting, with conditions in credit sectors such as high-yield corporate debt becoming a bit less attractive. However, the current cycle has different characteristics that suggest investors should not abandon credit strategies just yet. Let’s consider the features of a typical cycle, such as

Rate volatility poses more risk than rising rates

Rate volatility poses more risk than rising rates

While rising bond yields are consistent with a strengthening economic recovery, they also prompt the concern among businesses and investors that higher interest expenses could become a drag on continued expansion. Rising rates signal stronger economy We take a relatively positive view of the possibility of rising rates, which are also a symptom of better

Developed markets forge ahead

Developed markets forge ahead

Emerging markets are vulnerable to the marginal tightening of U.S. monetary policy, we believe, caused by the reduction in bond purchases by the Fed. In December, the Fed announced it would reduce its $85-billion-per-month bond-purchase program by $10 billion beginning in January. Although the Fed describes the reduction as less accommodation — rather than marginal

New home sales shine in U.S. recovery

New home sales shine in U.S. recovery

Based on its internal dynamics, the U.S. economy continues to be one of the most attractive for investors. One of the key pillars of support for the U.S. economy has been the housing market. Dynamics of the housing market include low prices, low mortgage rates, high pent-up demand due to rising household formation, and institutional