The Financial Times – Trump’s healthcare ultimatum sets stage for Republican showdown President warns party members to scrap Obamacare on Friday or risk being stuck with it Donald Trump has warned Republicans to pass a new healthcare bill on Friday or risk being stuck with Obamacare as the febrile US capital heads into the most consequential… Continue reading An Ultimatum, Will It Work?
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See It Market (Blog) – Bond Market Sentiment Slides On Outlook Concerns This article looks at a unique market indicator that we’ve put together on the bond market. It provides a nice gauge of expectations for bonds in 2017 and beyond. It is designed to capture Bond Market sentiment and it does a fairly good… Continue reading A Bond Sentiment Update
The Financial Times – What if breakeven inflation and the “term premium” are measuring the same thing? The change in the Federal Reserve Bank of New York’s estimate of the “term premium” is, apparently, closely related to the change in the spread between US Treasury bonds and their inflation-indexed equivalents. For a given move in the five-year… Continue reading Term Premium and Breakevens Both a Read on Uncertainty
Comment A recent series of posts has explored the performance of the S&P 500 during Fed tightening campaigns since 1971. You can read more about how these tightening cycles were defined here. We have highlighted that the S&P 500’s performance during this tightening campaign has been exceptional for two reasons. First, at this point in the… Continue reading What is Driving the S&P 500’s Exceptional Rally During This Tightening Campaign?
The Wall Street Journal – Investor Bullishness May Have Already Peaked, Leaving Stock Rally In Doubt Major benchmarks are still within 2% of record highs, despite a sharp selloff on Tuesday. But some investors say that early hopes for tax cuts and a reversal in regulations under Mr. Trump’s administration are giving way to the realities of… Continue reading Has Stock Bullishness Peaked?
Bridgewater – Populism: The Phenomenon Populism is not well understood because, over the past several decades, it has been infrequent in emerging countries (e.g., Chávez’s Venezuela, Duterte’s Philippines, etc.) and virtually nonexistent in developed countries. It is one of those phenomena that comes along in a big way about once a lifetime—like pandemics, depressions, or… Continue reading A Historical Look At Populism
Financial Times – US junk bond spread rises to highest since early January It has not been as high since January 3. Speculative-rated bonds have been bid-up since the same time period last year as the oil price has rebounded and the economic outlook has brightened. But both of those factors have begun to fray in… Continue reading High Yield Still on Edge About Crude Oil
The Financial Times – Fed economists’ study warns of future episodes of ultra-low rates A study to be presented at the Brookings Papers conference this week by two Federal Reserve Board economists finds that rates could hit zero as much as 40 per cent of the time – far more often than predicted by other… Continue reading Responding To Ultra-Low Rates
MarketWatch – Caroline Baum: Why the Fed paid banks not to lend “Almost every money and banking textbook mentions the infamous Fed decision to double reserve requirements in 1936-1937. We teach our students that the last thing a central bank would want to do is to reduce the money multiplier in a depression.” Yet Ben… Continue reading Interest On Reserves
Bloomberg.com – Banks Take $252 Billion in ECB Free Loans With QE Exit in Mind The European Central Bank gave euro-area banks 233.5 billion euros ($252 billion) in its last offer of free long-term cash, the largest net amount since the program was launched. Banks’ interest in Targeted Longer-Term Refinancing Operations — four-year loans at… Continue reading Banks Take Advantage Of Final TLTRO
Real Time Economics (WSJ Blog) – Is the U.S. Economy’s Slow Growth ‘As Good As It Gets’? The U.S. economy is stuck in a rut. New research suggests that isn’t about to change. The last recession ended in mid-2009. Since, the expansion has been the third-longest in U.S. history but also the slowest of the… Continue reading The New Normal