The Fed's Control

The Fed controls every aspect of money (cost, supply and distribution) and while there is still plenty of it today, with great power comes great responsibility.

5 Realistic Surprise Predictions for 2022

What does 2022 have in store for fixed income markets? Read on as Bob Michele & Kelsey Berro shares 5 realistic predictions for the New Year.

Corporate Fundamentals: Where do we go from here?

While moderating somewhat over the last quarter, the overall pace of improvement in corporate health in the last eighteen months is nothing short of remarkable. Overall, we expect fundamentals to stabilize in 2022.

2021 Annual Bond Market Awards

Back by popular demand, we present Bob Michele's annual "Bond Market Awards" - including central banker of the year, villain in a leading role, rookie of the year, MVP, bond of the year and more!

FOMC: December 2021

Following the Fed's announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.

EMD ESG Issuance – The sustainability (r)evolution

ESG labelled issuance has become mainstream in EMD with a record year in 2021. We review the main trends and future expectations behind this ‘new normal’.

Hot Commodities

Following a volatile 2021, we examine the 2022 outlook for Oil, Iron Ore, Copper, and Aluminum.

Inflation in Asia Pacific - A different phenomenon

Rising inflation concerns are amplifying developed market rate hike expectations; in contrast APAC central banks have benefitted from more muted CPI. The rationale for this difference has important implications for investors.

Bankruptcy Remote or On Thin Ice?

Securitizations are based on having assets protected from the potential bankruptcy proceedings of the seller of those assets. No bankruptcy remoteness is like trying to skate with dull blades.

No Time To Wait: Bank of England

Why should the UK expect to see rate hikes earlier than other major developed markets? Why is this period different to 2011, when inflation overshot but the BoE remained on hold?

Investing Alongside the U.S. Consumer

Strong household balance sheets are leaving the U.S. consumer in great shape compared to historical standards. In this blog, we explore what that means for investors.

Evergrande and Chinese Real Estate: From no way home to homecoming

While the headlines of Evergrande have somewhat subsided, risks and uncertainty continue to linger on. In this blog, we summarize the most recent developments.

Ahead of the curve? The case for (some) emerging market local currency exposure

With inflation set to moderate next year in both EMEA and Latin America, we see value in a number of local curves that currently embed higher levels of risk premium. As we approach 2022, we think our space is getting more interesting.

Justifying High Yield Valuations

High Yield has been a favorite sector at the GFICC Investment Quarterly (IQ) meeting for three consecutive quarters despite valuations seemingly expensive. In this blog, we identify three reasons why High Yield remains attractive.

Synopsis of Corporate Fundamentals from IG Investment Quarterly: Enjoying the Ride

Subsequent to the recent GFICC (IQ) meeting, we highlight key areas fixed income investors should take notice in the Investment Grade Credit space.

FOMC Statement: September 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.

Corporate Fundamentals: The recovery continues

Corporate health continues to improve with upgrades outpacing downgrades. Despite renewed focus on shareholder-friendly actions and the resultant potential for idiosyncratic risk, we remain constructive on the outlook for corporate health.

Sugar High: Part 3

With 4 more months of data in hand, our final blog of the Sugar High trilogy takes a look at how the labor and inflation markets have progressed leading up to the Fed’s eventual taper.

FOMC Statement: July 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.

The race is on for global strategic dominance

There is chatter in markets that Chinese policy is turning hawkish and that growth may slow markedly as a result. We disagree. In our view, Chinese policy is being adjusted, reflecting medium run priorities in a way that should not result in the feared growth downside.

EM Corporates: Emissions in Focus

Sectoral composition and a small number of credits explain much of the difference in CEMBI's carbon intensity vs. other fixed income asset classes.

IG Credit: Navigating a rising inflation environment

Investment Grade Credit markets look well positioned to withstand higher inflation but there is divergence beneath the surface

Muni Credit: How Would You Spend $195 billion?

An unprecedented $195 billion in funding from the American Rescue Plan Act positions U.S. states to contribute to the economic recovery, mend balance sheets, and offer a stabilizing credit profile.

FOMC Statement: June 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.

‘Long’ time coming

Liability-aware and yield-seeking investors should pay close attention to changes in the market’s micro-structure to find potential hedging and income opportunities

2021: Approaching Half Time

Over the last five months, positive growth and inflation data coupled with the risk of tighter future monetary policy created headwinds for fixed income investors. Some sectors within the universe, however, were better positioned.

Where to find credit when credit is due?

In today’s market environment, a multi-sector approach to credit can help investors capture the remaining upside of the market while smoothing downside risks.

Sugar High: Part 2

Following another month of jobs and inflation data, we revisit our last blog, “Sugar High”, and reflect on the recent price action in the US rates markets.

Introduction to Climate Change Scenario Analysis

Climate change is considered to be one of the most pressing challenges of our time, with far-ranging and interconnected environmental, societal and economic ramifications. In this blog, we highlight risks to portfolios and how they can be quantified.

Fed tells markets: You have DRS (drag reduction system)

Bob Michele, GFICC’s CIO introduces the thrilling world of Formula 1 racing. With US economy rushing ahead and the Fed in full throttle accommodation mode, Bob discusses why it’s time to supercharge portfolios as we pick up speed into a permitted and approved DRS zone.

FOMC Statement: April 2021

Following the Fed's announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) team.

Credit Market Recovery: A year in review

Last April, as the reality of the pandemic began to set in, our analysts were girding for a difficult credit environment. A year later, we have seen significant improvement in credit metrics across both developed and emerging markets for both investment-grade and high-yield companies.

Sugar High

Since last March, the Fed has been on a hunt for economic treats. Read on as we discuss how or when “substantial” economic progress will be made and whether the recovery will turn into a sugar high.

“Securing” Corporate Pension LDI Diversification

More baskets, more eggs on the value hunt: strategic benefits of incorporating long securitized for liability hedgers.

FOMC Statement: March 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) team.

What’s my carbon risk premium?

Uncovering opportunities in actively-managed Net Zero portfolios through an inclusive, integrated, forward-looking framework.

Finding opportunities in the COVID recovery

While headline spreads have narrowed, investment grade credit continues to offer opportunities for active investors

Why buy bonds?

In our latest blog, Greg Tell, Head of GFICC Investment Specialists, illustrates how risk-adjusted returns drive outcome oriented solutions for investors.

Chinese taper tantrum? Interpreting PBoC monetary policy in 2021

Volatile liquidity conditions recently triggered concerns of PBoC rate hikes. A better indicator of future monetary policy is the PBoC’s interest rate corridor.

Multiple reasons for multi-family

The agency CMBS market offers an attractive way for fixed income investors to access one of the more resilient sectors of the commercial real estate market.

FOMC Statement: January 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) team.

2020: A year to remember for MBS

We look back at the major themes that impacted the Agency MBS sector in 2020 and highlight what’s to come in 2021.

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

2020 Annual Bond Market Awards

Back by popular demand, we present Bob Michele's annual "Bond Market Awards" - including central banker of the year, villain in a leading role, rookie of the year, MVP, bond of the year and more! 

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

'Blue ripple' and the USD outlook

The ‘Blue wave’ the market had prepared for now appears to be more of a ‘Blue ripple’ and currency markets are adjusting to a different political outlook.

Add extra guacamole for a dollar!

Emerging Markets Local Currency debt emerged as one of our best ideas at our most recent investment quarterly meeting. This isn't just about the US Dollar; we like what we see in local EM.

Is there green in the graying baby boomers? Why we like non-profit tax-exempt senior living bonds

At our recent IQ meeting, we concluded municipal high yield was one of our best ideas. In this piece we take a deep dive into one of the more opportunistic sectors in the tax-exempt market.

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

Emerging Markets: Don’t Fight the Central Banks

The opportunity cost of not investing in EM debt remains very high. Most importantly the same applies for the rest of fixed income: don’t fight the central banks.

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

A Road to Recovery

In response to Europe’s biggest growth shock in a generation the EU council agreed on the outline of the “Recovery Fund” to help cushion the economic fallout from the pandemic.

A new era for alpha generation in local emerging markets?

The global savings glut has been driving asset price valuations for the last decade or so. Emerging Markets and investors need to prepare for a potential new world.

Will a “Blue Wave” carry UBI onto the shore?

The potential outcomes of the U.S. elections could usher in more than just higher taxes.

CLOs: not the CDOs of yore

Recent headlines have compared today’s CLO market to the subprime mortgage market of old; we do not believe CLOs pose system risks to the financial system.

China’s Interest Rate Pivot

While China’s post-Covid-19 economic data is showing signs of normalization, the government’s focus on stability will have significant implications for monetary policy and interest rates

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

Emerging Markets: From Beta to Value

Investors fled emerging markets ahead of the pandemic, but are now slowly returning. We expect a gradual economic recovery to continue to support returns, and seek to rotate into select beta.

Confirmation, Conflict, Hope

Top of mind insights from our Global CIO

The United States of COVID

Now that the US has entered the beginning stages of the reopening process, we discuss the speed in which the US economy can rebound with a focus on systemically important States and politics.

COVID-19 era: addressing top investor questions

COVID-19 uncertainties abound. With the help of the team, Andrew tries to tease out a macro view through answering vexing questions.

Treasury’s 20-20 vision

Next week the Treasury will re-introduce 20-year bond issuance as they look to manage increasing borrowing needs and capitalize on growing demand for long bonds by LDI investors.

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A longer road back for corporates

Liquidity provision doesn’t remedy a weak outlook for corporate fundamentals. Thoughtful sector and security selection is needed to navigate the minefield ahead.

Monetary financing – crossing the line?

We expect bond markets to remain sanguine about the shift to unprecedented monetary financing until there are signs that the economy is emerging from the downturn.

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

Is the Bond Market Dead?

The bond market isn’t dead, but to deliver a reasonable return we need to balance the safety of co-investment alongside central banks with the opportunistic hunt for higher yield and return.

Challenges in EM during current pandemic

EM valuations reflect much of the outlook ahead, but the uncertain COVID-19 impact remains a downside risk. As such, we remain defensive, favoring EM investment-grade credit.

Where will the cash go?

With the appearance of COVID-19 and the extreme market sell-off in risky assets, in the space of 3 months investors have aggressively been buying money market funds.

The PBoC – Rate Cuts and Policy Clarification

The Peoples Bank of China recent policy actions help address the concerns that its policy response was lagging the aggressive actions taken by other central banks.

Emerging Markets Debt – Time to Buy?

The last four weeks have created deep value and at current levels EM IG offers an attractive alternative with less credit risk and the prospect of double-digit returns.

What is next for US Inflation?

Given the dramatic shift in the global economic outlook as a result of COVID-19, US inflation will slow but the market may be too pessimistic.

Thou Shalt Fund….and Shalt Not Fail

As the Coronavirus Aid, Relief, and Economic Security (CARES) Act emerged from on high in the Senate, it became clear to me what this meant for fixed income investors.

High Yield Valuations in the Age of Coronavirus

As all asset classes have repriced over the past few weeks, the Global High Yield Team believes looking at leveraged credit valuations in the context of historical bear markets can provide actionable insights for investors.

The week the bond market broke, and the week everyone put It back together

The bond market was broken, but policy makers and market leaders worked around the globe to fix the system.

Getting the market back on its feet

Market functionality needs to be restored no matter how anyone feels about the methods it may take to get there. If the current market conditions persist, the consequences may be severe.

Waiting it out. . .

Volatility across markets has created considerable anxiety amongst investors trying to gauge the effectiveness of global response from healthcare, monetary and fiscal policy. Given how varied the responses are, this may be an unsolvable riddle over the near term

Emerging Market Investment Grade: Market Well Held

With markets down across the globe, we are writing to tell you that EMD has not delivered a homogenous drawdown. Instead, there has been a resilience in our arena that is worthy of comment.

If you give a mouse a cookie…

The Fed’s emergency cut significantly increased the odds of returning to the zero-lower bound in 2020.

Shock, crisis, rinse, repeat

We’ve seen Fed rate cuts before, during the 2008 crisis—this one removes a question mark for the economy.  Now small businesses also need support.

Make the Fed Cut Again

While no one knows for certain what 2020 or 2022 will bring to the White House and the Fed, staffing changes and increasing political pressure within the Fed is a near-certainty.

Singapore Dollar – no longer defying gravity

The Singapore Dollar is no longer defying gravity – we discuss why and the implications for cash investors.

Key macro risks for bond portfolios in 2020

We assess the key macro risks investors should be thinking about in 2020 and their potential impact on global bond portfolios.

The ECB's strategy review: Actions speak louder than words

With the ECB quickly running out of tools and inflation still some way from their current target, the market will be keen to hear what comes next.

The current evolution of the mortgage market

Bubble alert? Not so fast, mortgage credit availability has slowly emerged from extinction. Read our insights on the current evolution of the mortgage market.

Taxable munis in 2020: Opportunity knocks

The taxable municipal market is expected to see a spike in supply and more diversified issuance. We explore the potential opportunity for investors.

5 realistic surprise predictions for 2020

Our team puts forth predictions around fixed income market returns, Treasury yields, gold and the U.S. presidential elections.

2019 annual bond market awards

We present our bond market awards for 2019 - including central banker of the year, villain in a leading role, rookie of the year, MVP, lifetime achievement award and more.

PBOC: small move, strong signal

We look at why the People’s Bank of China’s (PBoC) made its recent and notable dovish pivot and its implications for investors

FOMC statement & potential impact on fixed income

Following the Fed’s announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

Emerging markets debt: stronger than it’s ever been

In our view, emerging markets debt deserves the positive attention it has been receiving in an era of central bank interference and global hunt for yield.

Fun in funding land

We think the Fed’s actions have assuaged some concerns about short-term funding but risks still remain.

The forest and the trees

When constantly watching financial markets and following the 24-7 news flow, it can be easy to get caught up in the trees and miss the forest.

Chinese property - a paradigm shift

Chinese property is one of the largest sectors in the Asia high yield bond universe, and is often considered as one of the “safer” sectors by investors.

FOMC statement & potential impact on fixed income

Following the Fed's recent announcement to cut rates, we discuss our views on the meeting and our outlook on monetary policy.

Pension and insurance strategies: when traditional measures fail to capture the risk for income focused portfolios

Clients look to income focused strategies to meet their objectives, but traditional metrics of risk may not be appropriate for income focused strategies.

Emerging markets and the negative yield conundrum for fixed income investors

Record low bond yields pose a major problem for fixed income investors. We explore why taking active FX risk can be a solution for investors.

RBA: uncharted territory for unattainable goals

The Reserve Bank of Australia cut its overnight rate to a new record low - leaving the RBA in uncharted territory.

Negative rates – how low can you go?

It seems the global financial system has gone crazy as rates continue to fall further negative. We review why and the impacts it has on the market.

Silver bullets are not magnetic

I explain why a whatever-it-takes policy approach is not a silver bullet and will eventually lead to pain.

No longer “why” but “how”: the case for emerging markets debt matures

In a world where real yield is increasingly scarce, it is our view, emerging markets debt deserves a larger role in a global fixed income portfolio.

Watch the lag: thoughts on core CPI (part 2 – an update)

We analyze which economic indicators the Fed should pay attention to and which ones are false alarms.

Passing the baton to fiscal

ECB governors are agreement that it's time for fiscal policy to now take the baton from monetary policy as the main instrument to stimulate the economy.

Trading the thrill of the ECB chase

We review July's ECB monetary policy and determine the impacts on the ECB and the Eurozone.

What does the bond market know that the stock market doesn’t?

Why is the stock market at near all-time highs, while the bond market is signaling recession?

“Technically” speaking the US high yield market has strong price support

Even as markets price in recession risk, we look at how the technicals in the high yield market is as important as solid fundamentals in the short term.

EM central banks – the case for an asymmetrical beta to the fed

EM Central Banks have a relatively high beta to Fed policy rates. We believe EM Central Banks will deliver a significant cutting cycle across most countries.

FOMC statement & potential impact on fixed income

Looking beyond the disappointing press conference, we believe the FOMC is employing a proactive risk management approach as opposed to a reactionary policy.

10 year US treasury yields are headed to 0%?

The central banks must take the lead, and it must start this month. They must bring front end real yields so low, so fast that the yield curve steepens.

Summertime state of play for the central banks

If central bankers can engineer another dovish course correction which prolongs the global economic expansion in real terms, it will be a job well done. 

Narrative whipsaw

We see many different narratives driving markets, and we address the impact of a binary change in the short-term outlook for growth and financial asset prices.

Introducing ‘GAMP’ – generally accepted monetary principles

What seemed like unconventional and bizarre monetary policies in the immediate post-crisis world, have come to look generally accepted, if not pedestrian.

Moore rate cuts or a world of Cain?

President Trump has been presented with the opportunity to make a profound impact on the Federal Reserve.

MMT: short-term gain vs. long-term pain

Why is everyone is talking about Modern Monetary Theory?

Talking about ending QT is not the same as doing it

The market got a dose of what no-QT feels like, but now in March, the reality of $50 billion per month of liquidity withdrawal is likely to return.

Near-term views and the three phases endgame

With the benefit of hindsight, we can summarize the past year in markets with a pretty tight fit to almost two complete cycles through the Three Phases.

5 realistic surprise predictions for 2019

Our team puts forth predictions around the yield curve, US high yield returns, 10-year Treasuries, the US dollar and oil.

2018 annual bond market awards

We highlight our awards—including corporate bond of the year, currency of the year, comeback player of the year, unsung hero, MVP and more.

The dovish course correction (ish)

According to the roadmap I’ve described all year, a dovish lean into tight financial conditions should be cause for a significant relief rally in risk assets.

Off message

We recap macro and policy evolution, and then shoehorn it into the Three Phases Model to get a near-term outlook for further market performance.

Potential pathways for higher yields

Intuition, math, the increase in Treasury supply from the budget deficit and Quantitative Tightening, it feels weird that Treasury yields aren’t higher.

Three phases update and assessment

A lot has happened since my last dispatch on the Three Phases Model. I’ll detail where I think we are in its evolution.

The case for leveraged loans

We take a in-depth look at the leverage loan market.

IOER – does the latest fed move have any practical implications for cash investors?

The Fed’s interest on excess reserves (IOER) shot to prominence following an unprecedented adjustment by the central bank. We explore its impact on investors.

More sea shells please: assessing early signs of liquidity withdrawal

We look at three charts which are seemingly unrelated, but we think each represent early signs of the impact of US monetary tightening.

The miraculous japanese labour force

Japan suffers from labor shortages and the working population is no longer growing. So how is it possible the economy just added the most number of jobs on record?

Examining offshore dollar liquidity in light of the three phases model

We focused on global central banks’ withdrawal of liquidity as the primary market driver. Now, we look more closely at USD liquidity from an offshore perspective.

Approaching the first intermission

Realized volatility in all asset prices should continue to be elevated as markets adjust in fits and starts to the new reality of liquidity removal.

China’s $3 trillion bond index inclusion

We review how the inclusion of China onshore government bonds in the Global Aggregate Index impacts the market.

The shadow productivity escape hatch

When an economy reaches full employment, productivity growth must then also occur to lift potential, otherwise inflation pressure builds. Where are we now?

Key risk scenarios for bond portfolios in 2018

We outline the key risk scenarios for bond portfolios in 2018.

Policy reversal: a play in three acts

Making market prognostications is always a tricky business, but we frame the debate in 3 phases, with Phase 1 an uncomfortable time.

2017 annual bond market awards

From bond of the year to most valuable player to comeback player of the year, we've presented our bond market awards for 2017.

Stock, flow, impulse: an update

We still believe the flow of central bank balance sheet expansion is still the dominant force driving markets, both risk markets as well as interest rates.

Quantitative tightening: many moving parts

Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.

What is R-star and is it rising?

Here we discuss what R-star or the real neutral rate of interest is and how it affects central banks and their ability to determine and explain policy.

A “structural reform” for the kids

We revisit a different structural reform proposal and expand on it with three key charts from the Organization for Economic Co-operation and Development.

Stock, flow or impulse?

Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.

An inadvertent reprieve

The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?

Natural disintegration

We examine how anticipated economic momentum over the near term is likely necessary to sustain the narrative, in effect to avoid the decay.

Printing versus burning

My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.

The epicenter of optimism

We share a short note to highlight one fascinating chart that in our view encapsulates the macro narrative thematically all by itself.

Alchemy is difficult and dangerous

The consequences of the Border Tax seem skewed toward a mixture of known and unknown negatives, with what looks to me like only dubious potential benefits.

Honeymoon to hangover

My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.

Big border tax, part 2

Part II of the Border Tax gives an update on the deep policy discussion brewing at the intersection of corporate tax reform and US trade policy.

Big border tax

There is a deep policy discussion brewing at the intersection of corporate tax reform and US trade policy. Here are two important points.

What are financial conditions and why do they matter?

There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.

2021: Approaching Half Time

Over the last five months, positive growth and inflation data coupled with the risk of tighter future monetary policy created headwinds for fixed income investors. Some sectors within the universe, however, were better positioned.

Sugar High: Part 2

Following another month of jobs and inflation data, we revisit our last blog, “Sugar High”, and reflect on the recent price action in the US rates markets.

Sugar High

Since last March, the Fed has been on a hunt for economic treats. Read on as we discuss how or when “substantial” economic progress will be made and whether the recovery will turn into a sugar high.

Magic Money Trees Part II

Andrew Norelli continues the discussion on looming inflation concerns which he previously detailed in his blog, Magic Money Trees Part 1.

Magic Money Trees? You Bet.

Andrew Norelli, Head of Income Strategies, makes the case why he sees inflation as the biggest risk to investors.

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

CLOs: not the CDOs of yore

Recent headlines have compared today’s CLO market to the subprime mortgage market of old; we do not believe CLOs pose system risks to the financial system.

Confirmation, Conflict, Hope

Top of mind insights from our Global CIO

The United States of COVID

Now that the US has entered the beginning stages of the reopening process, we discuss the speed in which the US economy can rebound with a focus on systemically important States and politics.

COVID-19 era: addressing top investor questions

COVID-19 uncertainties abound. With the help of the team, Andrew tries to tease out a macro view through answering vexing questions.

A longer road back for corporates

Liquidity provision doesn’t remedy a weak outlook for corporate fundamentals. Thoughtful sector and security selection is needed to navigate the minefield ahead.

Monetary financing – crossing the line?

We expect bond markets to remain sanguine about the shift to unprecedented monetary financing until there are signs that the economy is emerging from the downturn.

Is the Bond Market Dead?

The bond market isn’t dead, but to deliver a reasonable return we need to balance the safety of co-investment alongside central banks with the opportunistic hunt for higher yield and return.

Thou Shalt Fund….and Shalt Not Fail

As the Coronavirus Aid, Relief, and Economic Security (CARES) Act emerged from on high in the Senate, it became clear to me what this meant for fixed income investors.

Getting the market back on its feet

Market functionality needs to be restored no matter how anyone feels about the methods it may take to get there. If the current market conditions persist, the consequences may be severe.

Waiting it out. . .

Volatility across markets has created considerable anxiety amongst investors trying to gauge the effectiveness of global response from healthcare, monetary and fiscal policy. Given how varied the responses are, this may be an unsolvable riddle over the near term

Key macro risks for bond portfolios in 2020

We assess the key macro risks investors should be thinking about in 2020 and their potential impact on global bond portfolios.

5 realistic surprise predictions for 2020

Our team puts forth predictions around fixed income market returns, Treasury yields, gold and the U.S. presidential elections.

The forest and the trees

When constantly watching financial markets and following the 24-7 news flow, it can be easy to get caught up in the trees and miss the forest.

Silver bullets are not magnetic

I explain why a whatever-it-takes policy approach is not a silver bullet and will eventually lead to pain.

Watch the lag: thoughts on core CPI (part 2 – an update)

We analyze which economic indicators the Fed should pay attention to and which ones are false alarms.

What does the bond market know that the stock market doesn’t?

Why is the stock market at near all-time highs, while the bond market is signaling recession?

10 year US treasury yields are headed to 0%?

The central banks must take the lead, and it must start this month. They must bring front end real yields so low, so fast that the yield curve steepens.

Summertime state of play for the central banks

If central bankers can engineer another dovish course correction which prolongs the global economic expansion in real terms, it will be a job well done. 

Narrative whipsaw

We see many different narratives driving markets, and we address the impact of a binary change in the short-term outlook for growth and financial asset prices.

Talking about ending QT is not the same as doing it

The market got a dose of what no-QT feels like, but now in March, the reality of $50 billion per month of liquidity withdrawal is likely to return.

Near-term views and the three phases endgame

With the benefit of hindsight, we can summarize the past year in markets with a pretty tight fit to almost two complete cycles through the Three Phases.

5 realistic surprise predictions for 2019

Our team puts forth predictions around the yield curve, US high yield returns, 10-year Treasuries, the US dollar and oil.

2018 annual bond market awards

We highlight our awards—including corporate bond of the year, currency of the year, comeback player of the year, unsung hero, MVP and more.

The dovish course correction (ish)

According to the roadmap I’ve described all year, a dovish lean into tight financial conditions should be cause for a significant relief rally in risk assets.

Off message

We recap macro and policy evolution, and then shoehorn it into the Three Phases Model to get a near-term outlook for further market performance.

Potential pathways for higher yields

Intuition, math, the increase in Treasury supply from the budget deficit and Quantitative Tightening, it feels weird that Treasury yields aren’t higher.

Three phases update and assessment

A lot has happened since my last dispatch on the Three Phases Model. I’ll detail where I think we are in its evolution.

More sea shells please: assessing early signs of liquidity withdrawal

We look at three charts which are seemingly unrelated, but we think each represent early signs of the impact of US monetary tightening.

Examining offshore dollar liquidity in light of the three phases model

We focused on global central banks’ withdrawal of liquidity as the primary market driver. Now, we look more closely at USD liquidity from an offshore perspective.

Approaching the first intermission

Realized volatility in all asset prices should continue to be elevated as markets adjust in fits and starts to the new reality of liquidity removal.

The shadow productivity escape hatch

When an economy reaches full employment, productivity growth must then also occur to lift potential, otherwise inflation pressure builds. Where are we now?

Key risk scenarios for bond portfolios in 2018

We outline the key risk scenarios for bond portfolios in 2018.

Policy reversal: a play in three acts

Making market prognostications is always a tricky business, but we frame the debate in 3 phases, with Phase 1 an uncomfortable time.

2017 annual bond market awards

From bond of the year to most valuable player to comeback player of the year, we've presented our bond market awards for 2017.

Stock, flow, impulse: an update

We still believe the flow of central bank balance sheet expansion is still the dominant force driving markets, both risk markets as well as interest rates.

Quantitative tightening: many moving parts

Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.

What is R-star and is it rising?

Here we discuss what R-star or the real neutral rate of interest is and how it affects central banks and their ability to determine and explain policy.

Stock, flow or impulse?

Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.

An inadvertent reprieve

The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?

Natural disintegration

We examine how anticipated economic momentum over the near term is likely necessary to sustain the narrative, in effect to avoid the decay.

Printing versus burning

My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.

The epicenter of optimism

We share a short note to highlight one fascinating chart that in our view encapsulates the macro narrative thematically all by itself.

Big border tax, part 2

Part II of the Border Tax gives an update on the deep policy discussion brewing at the intersection of corporate tax reform and US trade policy.

What are financial conditions and why do they matter?

There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.

FOMC Statement: September 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.

FOMC Statement: July 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.

FOMC Statement: June 2021

Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.

Sugar High: Part 2

Following another month of jobs and inflation data, we revisit our last blog, “Sugar High”, and reflect on the recent price action in the US rates markets.

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

Treasury’s 20-20 vision

Next week the Treasury will re-introduce 20-year bond issuance as they look to manage increasing borrowing needs and capitalize on growing demand for long bonds by LDI investors.

FOMC statement & potential impact on fixed income

Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

What is next for US Inflation?

Given the dramatic shift in the global economic outlook as a result of COVID-19, US inflation will slow but the market may be too pessimistic.

FOMC statement & potential impact on fixed income

Following the Fed’s announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).

The forest and the trees

When constantly watching financial markets and following the 24-7 news flow, it can be easy to get caught up in the trees and miss the forest.

FOMC statement & potential impact on fixed income

Following the Fed's recent announcement to cut rates, we discuss our views on the meeting and our outlook on monetary policy.

Emerging markets and the negative yield conundrum for fixed income investors

Record low bond yields pose a major problem for fixed income investors. We explore why taking active FX risk can be a solution for investors.

Negative rates – how low can you go?

It seems the global financial system has gone crazy as rates continue to fall further negative. We review why and the impacts it has on the market.

Passing the baton to fiscal

ECB governors are agreement that it's time for fiscal policy to now take the baton from monetary policy as the main instrument to stimulate the economy.

FOMC statement & potential impact on fixed income

Looking beyond the disappointing press conference, we believe the FOMC is employing a proactive risk management approach as opposed to a reactionary policy.

10 year US treasury yields are headed to 0%?

The central banks must take the lead, and it must start this month. They must bring front end real yields so low, so fast that the yield curve steepens.

5 realistic surprise predictions for 2019

Our team puts forth predictions around the yield curve, US high yield returns, 10-year Treasuries, the US dollar and oil.

Examining offshore dollar liquidity in light of the three phases model

We focused on global central banks’ withdrawal of liquidity as the primary market driver. Now, we look more closely at USD liquidity from an offshore perspective.

Approaching the first intermission

Realized volatility in all asset prices should continue to be elevated as markets adjust in fits and starts to the new reality of liquidity removal.

Stock, flow, impulse: an update

We still believe the flow of central bank balance sheet expansion is still the dominant force driving markets, both risk markets as well as interest rates.

Quantitative tightening: many moving parts

Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.

What is R-star and is it rising?

Here we discuss what R-star or the real neutral rate of interest is and how it affects central banks and their ability to determine and explain policy.

Stock, flow or impulse?

Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.

An inadvertent reprieve

The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?

Printing versus burning

My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.

Honeymoon to hangover

My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.

Big border tax, part 2

Part II of the Border Tax gives an update on the deep policy discussion brewing at the intersection of corporate tax reform and US trade policy.

What are financial conditions and why do they matter?

There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.