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The Goldilocks Labor Report: “Just Right!”

It isn’t ever a good sign when markets become manic. August was quite volatile with five days out of 22 (23%) where the S&P 500 intra-day market swings exceeded 2%, and three days when the market closed down more than -2.5% from the prior day’s close. (We haven’t seen such price volatility since 2011!) While, so far, September has been less volatile, the market is still susceptible to tweets. For example, news about the …Read More

The New Mercantilism Rates Race to the Bottom Currencies Depreciate

During the recent period of world growth, where nearly every country’s exports were rising, there was little incentive for governments to manipulate economic policies to foster even more economic growth. Getting back to “normal” seemed to be the universally adopted mantra, and that implied rising rates and tighter monetary policies. However, today, when world trade is contracting (some of which may be due to “trade wars,” but much of which is due …Read More

Market Hopes: An Easy Fed; End Of Trade Wars. So Far, Neither One Has Happened.

The “expected” scenario, a resumption of trade talks, is what emerged from the G20 meetings. The best the agreement between Presidents Trump and Xi did was to temporarily reduce the specter of further growth killing tariffs. We still have the existing ones that have significantly slowed world trade, created a “soft patch” in the U.S.’s economy, and contributed to the emerging recessions in Europe and China. Capital spending growth is …Read More

Major Economic Trends: All Downbeat

The business cycle still exists no matter what the folks on TV or the politicians say. The major economic trends continue to weaken. Yield Curve Inversion Bond yields have fallen dramatically recently. The equity markets reflect nervousness. The yield curve is now inverted to the rates “administered” by the monetary authority. The Fed Funds rate is pegged near 2.4% versus the 10-year T-Note yield which stands near 2.1% as of …Read More

Q4: A Look at the Post-Hurricane Economy

As Q3 ended, the economy continued on its tepid growth path.  Unknown is the value of the economic carnage of two hurricanes that hit the mainland and a third that completely devastated Puerto Rico.  The bond and foreign exchange (FX) markets have a sense that all is not well, but, the equity indexes haven’t yet espoused that viewpoint. Meanwhile, at its last convocation in mid-September, the Fed’s Federal Open Market …Read More

Harvey & Irma: Pushing the Economy to the Tipping Point

Hurricane Harvey devastated the Houston area (and economy), and, while Irma could have been much worse, it still left significant destruction in Florida and the southeast.  What we can say for sure is that the monetary impact of Harvey alone would have been the largest natural disaster in U.S. history, and now we must add on the monetary impact of Irma.  And the hurricane season still has another month and …Read More