Bloomberg – Libor to End in 2021 as FCA Says Bank Benchmark Is Untenable Libor, the benchmark underpinning more than $350 trillion of financial products, will be phased out by the end of 2021, as U.K. regulators and banks look to replace the scandal-tarred indicator with a more reliable system. Andrew Bailey, the head of… Continue reading LIBOR To Be Phased Out By 2021
Bloomberg – Dollar Drops, Treasuries Rise on Inflation View Fed holds rates steady, see balance sheet unwind ‘soon’ The Bloomberg Dollar Spot Index fell to the lowest in more than a year, while the 10-year Treasury yield slipped back below 2.3 percent after the Fed held rates steady and indicated it would start unwinding its balance… Continue reading Dollar Still Expected to Rebound
Bloomberg – Mohamed El-Erian: Fed Reinforces Its Path Toward a ‘Beautiful Normalization’ The central bank is on a course that delivers low volatility and contains disruptions to the markets. At the end of its two-day policy meeting, the Federal Reserve on Wednesday delivered a rather milquetoast statement — purposely and understandably so. In the process,… Continue reading The Fed Meeting
The Wall Street Journal – Mnuchin Says Treasury’s Effort to Conserve Cash Is Costing Taxpayers Treasury Secretary Steven Mnuchin said Wednesday his agency’s efforts to conserve cash until Congress raises the federal borrowing limit impose a “significant” cost on taxpayers. Government debt hit the borrowing limit in mid-March, and the Treasury has been using these… Continue reading The Treasury’s Extraordinary Measures In Pushing Off Government Shutdown
Bloomberg – Tax Overhaul in Doubt as House GOP Stuck on Budget Disagreements The House is set to leave for its August recess without having taken the first essential step to overhauling the U.S. tax code: agreeing on a 2018 budget resolution. Disputes among House Republicans over spending levels and the controversial border-adjusted tax proposal… Continue reading An Update On The Odds Of Tax Overhaul
The Fed first hiked rates on December 15, 2015. In June they hiked rates a fourth time. They met today and while they did not hike, they set the stage for balance sheet reductions in September. Given this, we decided to take a look at market returns since the Fed started hiking. The first chart… Continue reading Total Returns During Fed Tightening Campaigns
This table details stock total returns through July 25, 2017. As noted in the post above, stocks are experiencing the best total returns for a tightening cycle. Stocks are up 25.40% since December 15, 2015. Value stocks (orange line) have outperformed. Info Tech (orange line below) and Financials (green line… Continue reading Total Returns Since The First Fed Rate Hike – US Stock Sectors
As noted above, the information technology sector has been one of the best-performing sectors since the Fed started tightening. Semiconductors (light blue) are leading the way, up 120%. Financials are another sector outperforming since the Fed started hiking. Unlike information technology above, the industry’s returns are a lot more clustered. Energy is… Continue reading Total Returns Since The First Fed Rate Hike – US Stock Industries
The table below highlights world equity total returns in dollar terms through July 25, 2017. Since the Fed first hiked on December 15, 2015, the broad world stock indices are tightly clustered around the world index (thick blue line). The one exception is emerging markets (red line). The chart below breaks down emerging… Continue reading Total Returns Since The First Fed Rate Hike – World Stocks
The table below shows US fixed income total returns through July 25, 2017. Since the Fed started hiking on December 15, 2015, the long Treasury measure (red line below) has been the best performing group of those shown. CMBS and MBS have outperformed the overall agency benchmark since the Fed started… Continue reading Total Returns Since The First Fed Rate Hike – Bonds
The chart below shows the fixed income HFR indices versus a couple fixed income benchmarks (red and orange lines). Fixed income hedge funds have done OK against their benchmarks.