THIS WEEK’S TOP POSTS Jim?s View: Why and How The Curve Inverts We have voiced our concerns that the Fed may be hiking in the face of higher inflation expectations without any actual inflation materializing. This type of action... Read More
Charts that are near extremes and the most popular contracts that caught our eye this week.... Read More
Implied volatility across risk assets are swiftly reconnecting to U.S. Treasuries, indicating a realignment of risks. But, U.S. high yield has stubbornly bucked this trend, indicating little fear over an abrupt rise in U.S. Treasury yields. We are watching realized and implied volatility of U.S. Treasuries to determine when junk bond investors should truly worry.... Read More
Searches related to home stores are a bright spot in otherwise declining traffic related to major purchases. Home improvement retailers are positioned to benefit. ... Read More
Can ETF fees ever get low enough that a marginal cut no longer matters? As long as robo-advisors scour the markets for every possible advantage, the answer is no. Are negative fees coming?... Read More
Wage growth expectations are tempering toward 2.8% year-over-year by the end of 2018. Slowing consumer search trends (Google) and difficulty for employers to find quality labor are helping keep a lid on improving wages.... Read More
Global concerted tightening is underway with emerging economies joining the chorus. The U.S. yield curve is bound to continue flattening as long as economic growth across the Eurozone and Asia Pacific are not lasting. We are closely watching the correlation between the U.S. 2-year 10-year spread and global volatility to gauge this risk.... Read More
News trends for a 'euro exit' are clearly rebounding, however its impact on the euro has been marginal at best. History suggests investors have no clue how to adjust valuations in the event one or more countries leave the union. We are seeing potential over-reactions in Italian and German 10-years revert back toward fair value estimates.... Read More
FOMC rate hike timing has become extremely sensitive to changes in TIPS breakevens (i.e. inflation expectations) in 2018. Yesterday's shellacking tore down inflation expectations, which have investors now looking to two, not three, hikes over the next 12 months. ... Read More
Fed funds futures have repriced the odds of hikes in September and December over concerns in Italy.... Read More
There are reasons to take the current concerns of an EU implosion a bit more seriously than the numerous episodes in the past.... Read More
Uncertainty is rocketing higher in Italy and the broader Eurozone due to the rise of populism and slowing economic growth. We find Google search activity by the citizens of Italy are a leading indicator of uncertainty and Italian 10-year yields relative to the major economies of the Eurozone. These search trends must persist to warrant such abrupt spread widening.... Read More
Broad outflows from cross-over investors in emerging markets offer opportunities for investors. Falling energy prices and lower Treasury yields will provide some relief, and even tailwinds, for some emerging markets. ... Read More
Consumer search trends within Germany, France, Italy, and Spain are reflecting slowing spend. Germany leads the pack in a deteriorating outlook, but some bright spots exist in Spain. Real GDP is expected to slow toward 2.2% year-over-year into year-end.... Read More