The Fed is Far From Dovish
Having listened carefully to the FOMC news conference last night, the message to us was clear – the Fed is pushing ahead with its normalisation of rates and the gradual shrinking of its balance sheet.
Insights Topic
US
Hedging Costs Can Also Be a Benefit
Those of you who have seen or heard one of our presentations will be aware of the significant impact that the FX-basis currently has on our relative value bond selection.
US Treasuries Break Through 3% on their Way to 3.25%
A few weeks ago we wrote about the geopolitical risks helping to keep credit spreads wider in Europe and the UK and keeping a lid on US Treasury yields (Is It Time to Buy the Dip?).
Farewell To An Old Friend
Last year, with credit spreads tightening close to historic levels, it seemed appropriate to us to take a more prudent stance and move to a more balanced portfolio.
No Smooth Ride For Tesla Bondholders
Like many of you we have been following the latest developments in the Tesla story with interest and curiosity, though fortunately not as investors, I hasten to add.
Is It Time To Buy The Dip?
We have had a lot of discussion, both internally and externally, over the last few days around when might be the time to begin adding more risk to portfolios again.
When Will The Fed Stop Hiking?
Whilst no hike from the FOMC was expected overnight, markets are still pricing in an eighth hike in September and a ninth in December, which would take the upper bound of the Fed Funds rate to 2.5%.
Yield Curve Flattening to Pause
This significant flattening came about as the Fed signalled its determination to push through policy normalisation, with four hikes now expected for the calendar year 2018, which would take the upper bound of the Fed Funds rate to 2.5% by year-end.
Is the Feds Independence Being Tested?
Looking at the state of the Turkish economy since President Erdogan decided to meddle in the affairs of its central bank; with the Lira down about 20% vs the US dollar, inflation running at 15%, and the yield on the 10yr government bond running at almost 17%, you might be tempted to think that most leaders would stay well away from the subject.
This Cycle’s Low Yields Are Behind Us
Credit metrics, as measured by the rating agencies, continued to improve throughout the first half of this year, with all corners of the globe having comfortably more upgrades than downgrades.
Will mortgage rates paint the Fed into a corner?
In recent weeks we have talked often about the tightening of lending standards, the possibility of the end of dot plots, and especially the shape of the US yield curve – today’s blog encompasses all three.
Keep an eye on the tightening
Following on from our recent comment on the level of Italian BTPs and how this has a potential to impact the transmission mechanism, it is interesting to note the subtle but important changes that have been applied elsewhere across the global economy.