Perspectives from our Global Fixed Income, Currency & Commodities Group
Volatility throughout 2022 has sharpened the focus of commentators and participants alike on market liquidity. In this blog, we start to unpack this evasive concept with an eye towards US Treasuries.
The Fed’s balance sheet journey has only just begun. They have successfully increased the cost of money but are only just beginning to reduce the supply.
The Communist Party of China (CPC) concluded its 20th National Congress on the 22nd of October, marking the end of an old term and the start of a new term.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
The Fed’s view that inflation would be transitory has turned into a horror movie. We flag several risks that suggest the Fed might now be making more progress than it thinks.
Our quantitative indicators continue to signal the dollar is overvalued. We believe that the prospects of valuation based strategies are becoming more attractive for investors with a sufficiently long time horizon.
While fundamentals will likely weaken as monetary conditions tighten, we continue to believe that our investment universe of investment-grade and high-yield credits are well-positioned to weather the storm.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
In 2022 we have seen both distress in corporate bond markets and significant monetary tightening. Global high yield credit factors outperformed the ICE BofA Global High Yield Index by 1.6% in Q2, building on the strong Q1 performance.
In 2022 we have seen both distress in corporate bond markets and significant monetary tightening. Global high yield credit factors outperformed the ICE BofA Global High Yield Index by 1.6% in Q2, building on the strong Q1 performance.
GFICC’s EM Asia Corporate Research Team provides insight into current market conditions across sectors impacted by recent credit events in China.
The US dollar has appreciated strongly this year reaching parity vs the euro. We evaluate why this has happened and what could cause this trend to change.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
2022 has been a brutal year in emerging markets. We see an alignment that suggests value has been created. It’s time to take another look.
Since our blog last quarter, fundamentals for US companies have not changed materially, but the odds of a recession have grown markedly due to the Fed’s response to sustained inflationary pressures.
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
Dissecting the Fed’s reaction to booming commodity prices
For a considerable number of higher education issuers, strong tailwinds will give way to more challenging headwinds.
The Three Phases Model guides positioning for Quantitative Tightening, but with some new monetary quirks. Risk-off with simultaneously rising yields might not persist much longer.
The FOMC voted to raise the Fed Funds rate by 50 bps to a target range of 0.75%-1.00%. The Committee also confirmed the start of the quantitative easing (QT) program beginning in June.
When reviewing the impact of the rises in commodity prices on currency markets some clear winners and losers emerge.
Recent research shows EM corporate bond ratings are both more stable and less likely to default than their developed market peers. That may surprise some skeptics.
Despite inflationary headwinds and geopolitical concerns, corporate fundamentals remain healthy.
The desire for natural gas has led the US and EU to boost LNG supplies to European Nations
Following the Fed’s announcement, find out latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. rates team.
Exploring how an unprecedented commodities shock might affect central bank policies across the globe.
March is the kick-off month for climate-related events and we expect muni credit to again be resilient. Yet, as seen last year, these events have increased in both frequency and cost.
With central banks on the move, in this blog, we explore the reasons why the terminal rate may be higher or lower in this cycle.
Central banks have opted to tighten monetary policy in the face of inflationary pressure causing higher volatility in IG credit markets.
MBS enters 2022 with a deteriorating technical backdrop alongside poor fundamentals, all of which, should result in choppy waters ahead for the sector.
Global high yield credit factors had their strongest quarterly outperformance since the global financial crisis despite geopolitical tensions and inflationary headwinds.
With investors concerned about a rising rate environment and the potential drag this can have on bond returns, short duration European high yield bonds pose a viable solution.
Following the Fed's announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.
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.
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.
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.
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!
Following the Fed's announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.
Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.
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.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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!
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
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.
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.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
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.
The potential outcomes of the U.S. elections could usher in more than just higher taxes.
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.
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
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Top of mind insights from our Global CIO
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 uncertainties abound. With the help of the team, Andrew tries to tease out a macro view through answering vexing questions.
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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Liquidity provision doesn’t remedy a weak outlook for corporate fundamentals. Thoughtful sector and security selection is needed to navigate the minefield ahead.
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.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
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.
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 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.
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.
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.
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.
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 bond market was broken, but policy makers and market leaders worked around the globe to fix the system.
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.
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
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.
The Fed’s emergency cut significantly increased the odds of returning to the zero-lower bound in 2020.
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.
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.
The Singapore Dollar is no longer defying gravity – we discuss why and the implications for cash investors.
We assess the key macro risks investors should be thinking about in 2020 and their potential impact on global bond portfolios.
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.
Bubble alert? Not so fast, mortgage credit availability has slowly emerged from extinction. Read our insights on the current evolution of the mortgage market.
The taxable municipal market is expected to see a spike in supply and more diversified issuance. We explore the potential opportunity for investors.
Our team puts forth predictions around fixed income market returns, Treasury yields, gold and the U.S. presidential elections.
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.
We look at why the People’s Bank of China’s (PBoC) made its recent and notable dovish pivot and its implications for investors
Following the Fed’s announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
We think the Fed’s actions have assuaged some concerns about short-term funding but risks still remain.
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 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.
Following the Fed's recent announcement to cut rates, we discuss our views on the meeting and our outlook on monetary policy.
Clients look to income focused strategies to meet their objectives, but traditional metrics of risk may not be appropriate for income focused strategies.
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.
The Reserve Bank of Australia cut its overnight rate to a new record low - leaving the RBA in uncharted territory.
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.
I explain why a whatever-it-takes policy approach is not a silver bullet and will eventually lead to pain.
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.
We analyze which economic indicators the Fed should pay attention to and which ones are false alarms.
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.
We review July's ECB monetary policy and determine the impacts on the ECB and the Eurozone.
Why is the stock market at near all-time highs, while the bond market is signaling recession?
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 have a relatively high beta to Fed policy rates. We believe EM Central Banks will deliver a significant cutting cycle across most countries.
Looking beyond the disappointing press conference, we believe the FOMC is employing a proactive risk management approach as opposed to a reactionary policy.
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.
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.
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.
What seemed like unconventional and bizarre monetary policies in the immediate post-crisis world, have come to look generally accepted, if not pedestrian.
President Trump has been presented with the opportunity to make a profound impact on the Federal Reserve.
Why is everyone is talking about Modern Monetary Theory?
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.
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.
Our team puts forth predictions around the yield curve, US high yield returns, 10-year Treasuries, the US dollar and oil.
We highlight our awards—including corporate bond of the year, currency of the year, comeback player of the year, unsung hero, MVP and more.
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.
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.
Intuition, math, the increase in Treasury supply from the budget deficit and Quantitative Tightening, it feels weird that Treasury yields aren’t higher.
A lot has happened since my last dispatch on the Three Phases Model. I’ll detail where I think we are in its evolution.
We take a in-depth look at the leverage loan market.
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.
We look at three charts which are seemingly unrelated, but we think each represent early signs of the impact of US monetary tightening.
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?
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.
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.
We review how the inclusion of China onshore government bonds in the Global Aggregate Index impacts the market.
When an economy reaches full employment, productivity growth must then also occur to lift potential, otherwise inflation pressure builds. Where are we now?
We outline the key risk scenarios for bond portfolios in 2018.
Making market prognostications is always a tricky business, but we frame the debate in 3 phases, with Phase 1 an uncomfortable time.
From bond of the year to most valuable player to comeback player of the year, we've presented our bond market awards for 2017.
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.
Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.
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.
We revisit a different structural reform proposal and expand on it with three key charts from the Organization for Economic Co-operation and Development.
Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.
The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?
We examine how anticipated economic momentum over the near term is likely necessary to sustain the narrative, in effect to avoid the decay.
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
We share a short note to highlight one fascinating chart that in our view encapsulates the macro narrative thematically all by itself.
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.
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
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.
There is a deep policy discussion brewing at the intersection of corporate tax reform and US trade policy. Here are two important points.
There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Top of mind insights from our Global CIO
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 uncertainties abound. With the help of the team, Andrew tries to tease out a macro view through answering vexing questions.
Liquidity provision doesn’t remedy a weak outlook for corporate fundamentals. Thoughtful sector and security selection is needed to navigate the minefield ahead.
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.
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.
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.
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.
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
We assess the key macro risks investors should be thinking about in 2020 and their potential impact on global bond portfolios.
Our team puts forth predictions around fixed income market returns, Treasury yields, gold and the U.S. presidential elections.
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.
I explain why a whatever-it-takes policy approach is not a silver bullet and will eventually lead to pain.
We analyze which economic indicators the Fed should pay attention to and which ones are false alarms.
Why is the stock market at near all-time highs, while the bond market is signaling recession?
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.
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.
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.
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.
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.
Our team puts forth predictions around the yield curve, US high yield returns, 10-year Treasuries, the US dollar and oil.
We highlight our awards—including corporate bond of the year, currency of the year, comeback player of the year, unsung hero, MVP and more.
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.
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.
Intuition, math, the increase in Treasury supply from the budget deficit and Quantitative Tightening, it feels weird that Treasury yields aren’t higher.
A lot has happened since my last dispatch on the Three Phases Model. I’ll detail where I think we are in its evolution.
We look at three charts which are seemingly unrelated, but we think each represent early signs of the impact of US monetary tightening.
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.
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.
When an economy reaches full employment, productivity growth must then also occur to lift potential, otherwise inflation pressure builds. Where are we now?
We outline the key risk scenarios for bond portfolios in 2018.
Making market prognostications is always a tricky business, but we frame the debate in 3 phases, with Phase 1 an uncomfortable time.
From bond of the year to most valuable player to comeback player of the year, we've presented our bond market awards for 2017.
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.
Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.
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.
Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.
The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?
We examine how anticipated economic momentum over the near term is likely necessary to sustain the narrative, in effect to avoid the decay.
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
We share a short note to highlight one fascinating chart that in our view encapsulates the macro narrative thematically all by itself.
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.
There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.
Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
The bond market was broken, but policy makers and market leaders worked around the globe to fix the system.
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.
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
The Fed’s emergency cut significantly increased the odds of returning to the zero-lower bound in 2020.
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.
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.
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.
Following the Fed’s announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
We think the Fed’s actions have assuaged some concerns about short-term funding but risks still remain.
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.
Following the Fed's recent announcement to cut rates, we discuss our views on the meeting and our outlook on monetary policy.
The Reserve Bank of Australia cut its overnight rate to a new record low - leaving the RBA in uncharted territory.
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.
I explain why a whatever-it-takes policy approach is not a silver bullet and will eventually lead to pain.
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.
We review July's ECB monetary policy and determine the impacts on the ECB and the Eurozone.
Why is the stock market at near all-time highs, while the bond market is signaling recession?
Looking beyond the disappointing press conference, we believe the FOMC is employing a proactive risk management approach as opposed to a reactionary policy.
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.
What seemed like unconventional and bizarre monetary policies in the immediate post-crisis world, have come to look generally accepted, if not pedestrian.
President Trump has been presented with the opportunity to make a profound impact on the Federal Reserve.
Why is everyone is talking about Modern Monetary Theory?
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.
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.
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.
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.
Intuition, math, the increase in Treasury supply from the budget deficit and Quantitative Tightening, it feels weird that Treasury yields aren’t higher.
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 Fed’s interest on excess reserves (IOER) shot to prominence following an unprecedented adjustment by the central bank. We explore its impact on investors.
We look at three charts which are seemingly unrelated, but we think each represent early signs of the impact of US monetary tightening.
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.
Making market prognostications is always a tricky business, but we frame the debate in 3 phases, with Phase 1 an uncomfortable time.
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.
Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.
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.
Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.
The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.
Following the Fed’s announcement, find our latest market views from the Global Fixed Income Currency & Commodities (GFICC) U.S. Rates team.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Following the Fed's announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Following the Fed’s announcement, find our latest market views from the Global Fixed Income, Currency & Commodities Team (GFICC).
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.
Following the Fed's recent announcement to cut rates, we discuss our views on the meeting and our outlook on monetary policy.
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.
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.
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.
Looking beyond the disappointing press conference, we believe the FOMC is employing a proactive risk management approach as opposed to a reactionary policy.
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.
Our team puts forth predictions around the yield curve, US high yield returns, 10-year Treasuries, the US dollar and oil.
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.
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.
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.
Here we take a closer look the Fed’s balance sheet activity to show the interactions, and take a view on how QT unfolds.
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.
Neither economic data nor the chaotic news cycle is the dominant force driving stock prices right now, it’s the flow of quantitative easing.
The Fed has tightened policy rates four times now, and financial conditions have gotten incrementally easier/looser each time. How should we interpret this?
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
My optimism at the opportunity presented to the new President has given way to more skepticism. Here are the positives and negatives.
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.
There are generally four components to financial conditions analysis. Learn how each in isolation influences the economy in different ways.
We review July's ECB monetary policy and determine the impacts on the ECB and the Eurozone.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
The Singapore Dollar is no longer defying gravity – we discuss why and the implications for cash investors.
We look at why the People’s Bank of China’s (PBoC) made its recent and notable dovish pivot and its implications for investors
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.
The Reserve Bank of Australia cut its overnight rate to a new record low - leaving the RBA in uncharted territory.
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?
We review how the inclusion of China onshore government bonds in the Global Aggregate Index impacts the market.