The economic calendar is modest. Volatility is lower even with plenty of news. The summer doldrums have arrived! It provides time for introspection to fill those empty timeslots and pages.
Our national debt has swelled to a record $21.16 trillion as of this writing. That includes debt held by the public ($15.4 trillion) and intra-governmental debt ($5.7 trillion). At $21+ trillion, our national debt is well above 100% of our Gross Domestic Product of $19.97 trillion.
I spend a lot of time on the road speaking to our investors and advisors and one of the common questions I get during the Q&A sessions is, “What keeps you up at night?” Aside from having an 18-year old daughter—and being a chronic insomniac anyway—my reply usually centers around debt and the burden it has and will continue to place on our economy.
"A rising global interest rate environment is once again leading to volatility in the emerging debt markets,” writes GMO’s Carl Ross in a newly-published Emerging Debt Insights piece. As the US 10-year Treasury has risen to the 3% neighborhood, benchmarks of emerging country bonds, both in hard currency and local currency, have fallen.
This memo covers three ways in which securities markets seem to be moving toward reducing the role of people: (a) index investing and other forms of passive investing, (b) quantitative and algorithmic investing, and © artificial intelligence and machine learning.
We've always been skeptical that bond yields carry deep meaning about the future. Low Treasury bond yields in recent years were said to be a signal of slower growth, or possibly a recession, ahead. And the bond world said stocks were over-valued.
We have used this quip from the book Why You Win or Lose: The Psychology of Speculation by Fred C. Kelly many times in our missives over the past nearly five decades because the wisdom of its message is timeless. We recalled it last week in many of our meetings in New York City when we heard certain individual investors, as well as portfolio managers (PMs), say “I should have!”
Recent posts from the diversified fixed income team have discussed how bond investors should be prepared to navigate a market that may look very different from what they've grown used to. In other words, it might be time to reassess the old bond-investing playbook.
The U.S. inflation story made further inroads this month, with year-over-year price growth for consumers and producers alike hitting multiyear highs. U.S. consumer prices expanded at their strongest pace in more than six years, climbing to an annual change of 2.8 percent in May. Prices for final demand goods, meanwhile, grew 3.1 percent, their strongest annual surge since December 2011.
The European Central Bank’s June meeting has offered some long-hoped-for clarity on the future direction of monetary policy in the eurozone. However, it hasn’t provided all the answers, and much remains open to interpretation. David Zahn, Franklin Templeton’s head of European Fixed Income, considers what might happen next and explains why he’s still not expecting a eurozone interest-rate hike before 2020.