The 10-year Treasury Note yield fell 13 basis points last week, a move that would not normally rate any mention whatsoever, but the path of that small decline does. From Monday to Thursday, the yield fell, from high to low, by 34 basis points, a move that added 1.3% to bond prices (Aggregate bond index) in four days. In a [...]
We got the latest report on economic growth last week and it surprised most everyone. Real GDP expanded by an annualized 3.3% in the fourth quarter, well above the consensus estimate of 2%. Nominal GDP expanded an annualized 4.8% quarter to quarter and 5.8% year-over-year. The annualized quarter-to-quarter change is exactly the average annual change since 1990. Real GDP grew [...]
The Fed left the policy rate unchanged at a range of 5.25-5.5%. Thinking about future meetings, Powell said that they he believes policy is restrictive and is working to bring down economic activity and inflation. But, he also said that they do not know whether the current policy rate is sufficiently tight enough to bring down inflation to 2% over [...]
I have often been accused over the years of being too optimistic and I will plead guilty to having a little rose-colored tint in my glasses. I am an optimist by nature and I search constantly for good things to write about. There are more than enough people out there willing to tell you the world is coming to an [...]
There he was, the Fed Chairman stumbling through a question about headwinds and transitory factors. No, not Jay Powell in January 2020, this was Ben Bernanke in June 2011. The Fed had just downgraded its recovery forecasts (again) and some in the media weren’t getting it. After all, QE2. It was this enormously powerful monetary agent introduced for a second [...]
There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. The Fed spent the last month forward guiding the market to the rate hike they implemented today. Interest rates, real and nominal, moved up in anticipation of a more aggressive Fed rate hiking cycle. [...]
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