The 10-year T-yield just poked its head out of 4.30s resistance. Economic data in recent weeks have come in much stronger than expected. Although it is hard to argue the rally in rates will have staying power – unless, of … Continued
Interest rates on both the short and long end have gone up meaningfully. The federal government sits on nearly $33 trillion in debt, and the budget deficit is on the rise even though the economy is growing. This only means … Continued
The federal government is up to the gills in debt. Interest payments run up in the billions every year. This was not much of an issue in a low-interest-rate environment. But right now, the Federal Reserve is tightening. Higher rates … Continued
Ahead of a crucial week in which the FOMC meets and the top six US companies report, large-cap equity indices broke out to new highs last week. The knock on this is that rangebound small-caps are yet to achieve that … Continued
Last week, the FOMC slightly tilted hawkish. Repercussions were felt across assets. Then early this week, dovish members were out in full force, pacifying investors that monetary morphine is here to stay; major equity indices are back at/near their highs. … Continued
Treasury Secretary Janet Yellen pretty much implied on Tuesday that the Fed is behind the curve, although she tried to walk back her comments later. The economy may be “overheating”, but the Fed is not ready to dial back its … Continued
Last March, the Fed essentially urged investors to take on risk and go up the risk curve. They have obliged. Leverage is high in the system. This works as long as the prevailing upward momentum is in place. When a … Continued
Reversing the prior week’s weakness, major US equity indices put up strong performance last week. The S&P 500, for instance, defended a rising trend line from last March. VIX collapsed, landing on low-20s, a breach of which opens the door … Continued
Last week, Fed officials threw cold water on incipient taper talk, making it clear they would continue to purchase treasury securities. This followed a backup this month in rates in the long end of the treasury yield curve, with the … Continued
The FOMC meets this week. The Fed already has unlimited QE in place. Not much is expected to come out of this meeting. If anything, aware that low rates are needed, Mr. Powell may drop a hint or two that … Continued