Wishing for a weak euro
We have concerns about the indirect approach of the European Central Bank as it seeks to use a weak euro to stimulate growth.
Category: Fixed income
Dollars tied to bond indexes face risk
2013 marked a watershed moment for index versus non-index sectors in fixed income. We see significant risk in the composition of the index.
Reading inflation: “Noise” or wake-up call?
The Fed may be downplaying signs of inflationary pressures that have been building in recent months.
The ECB relies on smoke and mirrors
In Europe, slow growth appears likely to continue, with some regional differentiation. Signs of strength in the south Spain is doing much better than it had been just 18 months ago, and even Italy looks somewhat healthy now that its political crisis has passed. Importantly, fiscal pressure in the form of austerity programs is slated
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
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
Why wages might rise
Unemployment continues to drop, but not because a lot of new jobs are being created, as many would hope. Instead, the unemployment rate is dropping primarily due to a declining labor participation rate. This remains a cause for concern for us because of what it could mean for inflation. The Fed, under Chairman Ben Bernanke,
How yields can change in a “normalizing” economy
As the Federal Reserve plots its actions and communications strategy for the gradual normalization of monetary policy, fixed-income investors face the challenge of anticipating the future course of interest rates. Economic growth influences interest rates The long-term “equilibrium” interest rate of an economy is intimately linked to the economy’s overall growth potential when it is
Does an inflation surprise lurk in Fed stimulus?
Ever since the topic of stimulus tapering was aired in June, the Fed has hastened to clarify its message: We’ll taper if and only if the data argues for tapering. Generally unimpressed with the U.S. recovery since then, the tough talk on tapering has noticeably cooled. The gradual reduction of the Fed’s bond-buying program is