By the end of the first quarter, U.S. economic data began to improve somewhat from what had been winter-related economic weakness. After disappointing results from various sectors of the U.S. economy, higher auto sales, improving business activity, and overall job creation that is generally in line with forecasts have helped shape expectations for a comparatively
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
There is little question that interest rates would be significantly higher in the absence of Fed purchases. It is important to understand how potentially damaging a long-duration strategy could be in this environment. The duration, or sensitivity to rate movements, of a 10-year Treasury bond is about nine years, which means that an increase in
While the outlook for developed global economies is by no means rosy, investors have been so pessimistic and defensively positioned for so long that the absence of another crisis could be enough to coax cautious investors back into the markets. There is still an extraordinary amount of money on the sidelines or in safe-haven Treasuries,
This fall, the Federal Reserve announced its widely anticipated third round of quantitative easing, commonly referred to as “QE3.” The aim of this latest initiative is to keep interest rates low in order to encourage investor risk taking and investment in the economy. Like the two rounds of easing that preceded QE3, the Fed will