Current economic conditions do not look recessionary, but risks are rising and if we’re heading into one, it’s possible it already started.
I explore a few different ways that President Trump may try to weaken the dollar.
I have often been asked when I am going to become a raging stock bull again. As Treasury Rates approach our zero target the table is being set for value to return to the stock market.
Gold headed for its best week in nearly two months as the value of negative-yielding debt touched a new record of $15 trillion. The 10-year Treasury yield fell below 2 percent, pushing gold above $1,500 an ounce for the first time since September 2013.
Market volatility has been on the rise as US-China trade tensions continue to flare and recent central bank activity has created more questions than answers. As such, many investors have been on edge.
Russ discusses why bonds are his preferred hedge in this environment.
The last few days have highlighted the inherent fragility in markets – and the growth outlook globally.
The establishment of local bond markets has been the single most important structural change in Emerging Markets (EM) in the past quarter of a century. Many investors still fear local markets due to FX volatility, but EM local bonds have performed better overall than US Treasuries and US stocks.
Rick Rieder and Russ Brownback highlight the investment themes that they think will drive markets and dominate debate within the investment community over the next several months and beyond.
The Northern Trust Economics team shares its outlook for U.S. economic growth, inflation, unemployment and interest rates.
It is no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative.
What distinguishes an overvalued market that continues to advance from an overvalued market that often drops like a rock? In my view, it’s the psychological disposition of investors toward speculation or risk-aversion.
Be that as it may, China’s central bank on Monday allowed its currency, the renminbi, also known as the yuan, to weaken past 7.0 versus the dollar, a level unseen since 2008. A weaker currency gives China certain advantages over the U.S., including making its goods more competitively priced for foreign buyers.
The economic calendar is one of the smallest of the year. With last week’s market decline and increased volatility, pundits who are not on a summer vacation can do some navel-gazing and reconsider their conclusions. Or not.
Treasurys outperformed TIPS in 19Q2, gaining 3.2% vs. 3.0%. With these gains, the average TIPS yield rose by five basis points to 0.45%, while the average Treasury yield fell 44 bp to 2.01%, reducing the average spread by 50 bp to 156 bp. With the strong outperformance, Treasurys now appear to be overvalued vs. TIPS.
In May the Congressional Budget office (CBO) updated its 10-year fiscal estimates for federal revenue, spending, and annual deficits through 2029. The CBO is a non partisan agency tasked with analyzing data to provide Congress estimates for GDP growth and the impact on government spending and revenue from changes in tax laws.
The Fed is flailing. For the past several years, under the leadership of both Jerome Powell and, before that, Janet Yellen, the Fed claimed it was "data dependent." But the decision last week to reduce short-term rates by 25 basis points tore that narrative to shreds.
Say what you will about this past week, it certainly wasn’t dull. The Federal Reserve, seemingly capitulating to President Donald Trump and Wall Street, became just the latest central bank to cut interest rates.
One reason the economy is so fascinating is the way things just… happen. Growth blossoms if everyone just follows their own incentives and nothing gets in the way. The courage, vision and passion of entrepreneurs and those who risk their money backing them is one of the most inspiring aspects of modern civilization.
The 25bp rate cut by the FOMC this week was warranted given ongoing weakness in housing, but the balance of the macro data remains positive, meaning a recession starting in 2019 is unlikely.
Expectation that the Federal Reserve will cut interest rates has been a primary factor driving investor sentiment and actions in recent months. It should be noted, though, that the considerations and actions of the Fed are part of a complex ecosystem that has financial, political and behavioral components that come with considerable uncertainty.
Municipal bonds have had a good run since the beginning of the year, but there’s still room for additional positive performance in 2019. That’s particularly true for investors who choose active strategies with the flexibility to move money around the bond market as conditions evolve.
Today’s news of 10% tariffs on the remaining $300bn of imports from China took markets by storm today with US stocks moving from a 1% gain to almost a 1% loss on the day. Meanwhile, gold closed at a 6-year high of $1445.
In this last quarter, the rapid rise in gold prices has got everyone talking. A slew of factors are combining to create the perfect storm in favor of Gold, and if you haven’t looked at Gold yet, you’re missing out big time.
The “dog days” of summer are upon us, and the “out of office” email bounce backs have increased accordingly. But while many Northern Hemisphere workers may be taking their summer breaks, the global economy continues to grind along.
With the pound sliding to two-year lows, currency markets are signalling a higher probability of a no-deal Brexit. But the fallout from no deal would hurt the rest of Europe, too, and add to downward pressure on euro-area bond yields.
Under today’s current market conditions, real assets may provide an opportunity for portfolio diversification and growth.
The FOMC is likely to lower its guidance rate tomorrow. When the economy is expanding and stocks are near their highs (like now), this has been a net positive for equities.
The outperformance of defensive sectors relative to cyclicals is looking extreme in Europe, suggesting the macro trade around bond-sensitive stocks may have stretched too far.
Fixed income markets will be hard pressed for an encore performance of the second quarter. Risk assets of all flavors rallied in conjunction with Treasury yields falling – whether this is causal or simply concurrent remains to be seen.
The Fed’s cure might make the disease worse without fixing the problem.
Russ discusses how central banks once again have investors’ backs.
The Fed continues to play an outsized role in influencing asset valuations that are historically high. As such, it is incumbent upon investors to understand when the Fed may be on the precipice of making a policy error. If asset prices rest on confidence in the Fed, what will happen when said confidence erodes?
The Fed is poised to join the global easing bandwagon, fueling a surge in risk asset prices. As market distortions from easy money grow, so does the importance of security selection and portfolio allocation.
I’m a firm believer that your thoughts manifest your future. It’s very hard to make money and be successful when you’re always expecting the worst to happen.
This article is a refresh and an update of an article I originally posted in 2015. However, the principles I am presenting are timeless and worthy of being revisited.
Boris Johnson, one of the most enthusiastic supporters of Brexit, is the United Kingdom’s new prime minister. David Zahn, Franklin Templeton’s Head of European Fixed Income, doubts Johnson will have much of a honeymoon period in the new role as he faces stiff challenges domestically and internationally, with global markets scouring his every move.
Following months of strong performance, Russ discusses why defensive sectors may be overpriced in the current environment.
How did active equity managers fare during Q2? Check out the latest insights from our manager research team.
This paper discusses Smith Capital Investor’s mid-year update to its 2019 outlook on key trends including interest rates, the Fed, credit, curves, CEO/CFO behavior, Washington/politics, and active fixed income.
Equity prices and 10-year treasury yields are painting very different pictures about where the domestic economy may be headed.
Over the last couple of weeks, I have laid out the bull and bear case for the S&P 500 rising to 3300, and the case for the Fed to cut rates. In summary, the basic driver of the “bull market thesis” has essentially come down to Central Bank policy.
It has been nearly 20 years since the tech bubble reached its peak. We see an investment pricing behavior similar to the tech boom. Then it was tech versus non-tech. Now, it is high growth versus everything else. As a new dementia takes over, we position differently.
Now that gold has broken through the $1,450 an ounce level, a six-high year high, the next big test is $1,500. And as I’ve said before, it can do this in the blink of an eye under the right conditions.
Pension funding has been an issue in many parts of the world and has certainly been a hot topic in Brazil. President Jair Bolsonaro’s election ignited market optimism on promises to reform pensions to get Brazil’s fiscal house on a firmer footing. The probability of this being delivered has increased considerably after approval of a new pension reform bill in Brazil’s lower Congress. Franklin Templeton Emerging Markets Equity’s Gustavo Stenzel and Marcos Mundim weigh in on what the breakthrough means for the country, and for investors.
Despite structural regional challenges, Russ provides insight on several factors that support European equities.
This article is a refresh and an update of an article I originally posted in 2015. However, the principles I am presenting are timeless and worthy of being revisited. Moreover, I have updated the supporting examples to more precisely reflect our current market environment.
When not taking on credit risk in a bond investment, which is better: individual Treasury bonds, FDIC-insured CDs or a mutual fund?
