Fed officials are signaling they might not be done with the inflation fight. Market pricing is not so sure.... Read More
The high yield market, and we would argue the larger credit markets, have had two cycles over the past decade - buy and hedge. Right now we are in a hedging cycle. Persistent inflation and QT could initiate the first selling cycle in a long time.... Read More
While many major asset classes back off record returns on the year as bonds rally and commodities cool off, returns continue to stay at historical extremes. ... Read More
With Q2 2022 earnings season underway, revenue and earnings growth expectations for Q2 continue to surprise yet expectations for future growth are crashing as uncertainties around the economy grow.... Read More
Many have called June the peak in yields. Yet, as yields soared this year, flows did not indicate capitulation. As the bond market continues to rally since mid-June, inflows have come in strong.... Read More
Inflation is a global problem, but the U.S. has a bigger problem than most. The U.S. increased its money supply more than any country and sent out more pandemic stimulus than anyone else. So, while the Fed cannot print ships or barrels of oil, they can rein in this excess demand-driven inflation by remaining aggressively hawkish.... Read More
Some market sentiment measures have reached levels at which the Fed used to intervene. With the fight against inflation now a top priority, the Fed put can no longer be relied upon.... Read More
Economists continue to forecast the Fed will back off on its aggressive rate-hiking campaign. Underlying this belief is a view that the world has not changed post-pandemic. However, we now live in a world of supply challenges. Pumping up demand, as these economists want, will make things worse.... Read More
The S&P 500 recently fell into bear market territory before staging a rally in the past two weeks. Valuations have come down significantly from the peak, yet a likely U.S. recession throws into question if earnings can justify valuations. ... Read More
For those unable to afford a 20% downpayment, the cost of renting is now cheaper than the cost of buying a house.... Read More
For the last few decades we have been in a low interest rate environment where deficit spending would not cause major issues, however 40-year high inflation prompted the Fed to tighten monetary policy, raising rates fast by large sized hikes. Higher rates means the cost of US debt will quickly explode higher. ... Read More
Forward curves tell us what is priced in and what is expected. But, they do not tell us what may actually happen.... Read More
Until the Fed gives some indication that inflation is not a priority, growth will slow, a recession is very much a possibility, and the Fed will remain aggressive in hiking rates.... Read More
Client Question for team Bianco: What is Arbor’s view on fed funds rate vs. The 2yrs given that the expected terminal rate is between 3 and 4%… In other words, how high will the 2yr go? Jim Bianco: First the... Read More
