<Click on chart for larger image> The Financial Times – Mohamed El-Erian: Fed’s snail-like tightening cycle leaves bigger questions Over the last three weeks, the implied probability of a 2016 rate hike has surged. Indeed, you need only look at the yield on the 2-year US Treasury, a maturity that is sensitive to rate expectations.… Continue reading Timing The Rate Hike
<Click on graphic for larger image> AQA – Peter Forbes: FOMC Needs Balanced Risks, Inflation Progress to Hike Again The formal balance of risks assessment has now been absent for the past three meetings while the FOMC remained divided on the level of downside risks. Financial conditions and global risks are now favorable for tightening,… Continue reading Do We Have The Necessary Ingredients For A Hike?
Brookings.edu – Ben Bernanke: What tools does the Fed have left? Part 3: Helicopter money In this post, I consider the merits of helicopter money as a (presumably last-resort) strategy for policymakers. I make two points. First, in theory at least, helicopter money could prove a valuable tool. In particular, it has the attractive feature… Continue reading A Closer Look At Helicopter Money
The Financial Times – Corporate bonds join negative yield club More than $36bn of corporate bonds with a short-term maturity currently trade with a sub-zero yield as the European Central Bank starts buying debt sold by companies this month. In the wake of the ECB announcing this policy shift back in March, eurozone corporate bond… Continue reading Negative Yields Creep Into Corporate Debt
<Click on graphic for larger image> MoneyBeat (WSJ Blog) – Pay No Mind to That Massive Corporate Debt Pile The stockpile of U.S. corporate debt keeps getting bigger, but it’s not yet big enough to worry equity investors. The largest 1,500 firms, excluding financials, increased their net aggregate debt by $517 billion in 2015, according… Continue reading Rising Corporate Debt
<Click on graphic for larger image> The Wall Street Journal – Greg Ip: Post-Recession Rethink: Growth Potential Dimmed Before Downturn Something looks wrong. Just as consumer spending picks up, business investment is headed in the opposite direction: It’s down now for two straight quarters, which typically has happened only in a recession. These numbers add… Continue reading The New Normal
<Click on graphic for larger image> Bloomberg.com – Goldman Says Hedge Funds Wedded to Top Picks Like Never Before Hedge funds, who’ve seen their reputations take a beating in recent months, have not suffered a corresponding hit to their confidence, at least as far as stock-picking goes. So says research from Goldman Sachs Group Inc.,… Continue reading Hedge Funds Double Down On Biggest Holdings
The Wall Street Journal – OPEC Ministers Play Down Hopes of Oil-Output Deal OPEC ministers tempered expectations of a production deal as they headed into a meeting to discuss output policies. The 13-nation cartel was widely expected to stick to the hands-off policy it has pursued for the past 18 months, but a last-minute proposal… Continue reading Crude Supply/Demand
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Charts of the Week Topics Covered This Week Include: Timing The Rate Hike Inflation Expectations And Fed Policy BRexit Is China Getting Better? Is China Getting Better? – 2 Fund Flows Update – We’re All Passive Investors Now Fund Flows Update – We’re All Passive Investors Now – 2 Trump And The Markets Clinton And… Continue reading Charts of the Week
<Click on chart for larger image> Comment The stories below discuss a summer hike, with July now the most likely date. Ten days ago many of these same sources thought the first hike would come in June. Interestingly, as the chart above shows, the market has just priced out the summer hike. The July 27… Continue reading Timing The Fed Hike
<Click on graphic for larger image> Bloomberg Business – Wall Street Turns to ETFs to Sidestep Illiquidity in Bond Market On pace to exceed annual record of $93.5 billion in 2015 Investors are putting record amounts of money into exchange-traded funds as bonds become increasingly difficult to buy and sell. Global fixed-income ETFs, which track… Continue reading Everyone Is A Passive Investor Now