Research & News
Asset Allocation Weekly (June 17, 2016)
by Asset Allocation Committee Our asset allocation process has generally favored longer duration fixed income instruments. We have expected inflation to remain low due to continued globalization and deregulation. Over time, low inflation brings low long-term interest rates. In recent weeks, domestic long-term interest rates have declined significantly. Although this isn’t a huge surprise to us,… Read More »
Daily Comment (June 17, 2016)
by Bill O’Grady and Kaisa Stucke [Posted: 9:30 AM EDT] There are three big stories today. Jo Cox, martyr: MP Jo Cox was brutally assassinated yesterday while campaigning for the “remain” vote in Leeds, England yesterday. A Labor MP and a rising star in the party, she was attacked while leaving a meeting with constituents. According… Read More »
Daily Comment (June 16, 2016)
by Bill O’Grady and Kaisa Stucke [Posted: 9:30 AM EDT] The last eight years have been full of unusual events. We have seen ZIRP, NIRP, QE of all stripes, massive increases in central bank balance sheets, collapses in monetary multipliers, low inflation, consistently wrong forecasts of higher interest rates, massive borrowing in China, flash crashes, commodity… Read More »
Daily Comment (June 15, 2016)
by Bill O’Grady and Kaisa Stucke [Posted: 9:30 AM EDT] BREAKING NEWS: Nigeria announced it is moving toward a market driven exchange rate policy, likely taking steps toward allowing its currency, the naira, to float. Although the Central Bank of Nigeria has allowed more flexible exchange rates recently, allowing a full float will likely lead to… Read More »
Daily Comment (June 14, 2016)
by Bill O’Grady and Kaisa Stucke [Posted: 9:30 AM EDT] Risk markets remain soft this morning in the wake of the German 10-year yield dipping under zero. (Source: Bloomberg) It is historic enough that we now have the German yield curve below zero going out 10 years. A total of 75% of German bonds now carry… Read More »
Weekly Geopolitical Report – The Trade Facilitation and Trade Enforcement Act (June 13, 2016)
by Bill O’Grady In February, President Obama signed the Trade Facilitation and Trade Enforcement Act, a broad refresh of U.S. trade laws. Title VII of this law concerns exchange rate and economic policies. The earlier law, passed in 1988, required the Treasury Department to determine if a nation was “manipulating” its exchange rate. If a… Read More »
Daily Comment (June 13, 2016)
by Bill O’Grady and Kaisa Stucke [Posted: 9:30 AM EDT] Week of meetings: the Federal Reserve, BOJ, BOE and SNB all meet this week. None are expected to change policy, although if one might, the BOJ would be the most likely. The JPY has been on a tear and the Abe government would like to reverse… Read More »
Asset Allocation Weekly (June 10, 2016)
by Asset Allocation Committee In our asset allocation process, we focus on cyclical trends—trends that tend to have three- to five-year time horizons. Two examples of these sorts of trends are the business cycle and the monetary policy cycle. Although both cycles can last longer or less than three to five years, in general, these types… Read More »
Daily Comment (June 10, 2016)
by Bill O’Grady and Kaisa Stucke [Posted: 9:30 AM EDT] We are seeing a continuation of yesterday’s market activity, with equities coming under pressure and sovereign bond yields falling around the world. Commodity prices are falling with equities, and the dollar is strengthening along with the yen. The weakness we are seeing in equities isn’t anything… Read More »
Daily Comment (June 9, 2016)
by Bill O’Grady and Kaisa Stucke [Posted: 9:30 AM EDT] Signs of a growing rebellion against negative interest rate policies (NIRP) were evident this morning. The front page story in today’s FT is “Negative Rates Stir Mutiny with Bank Threats to put Cash in Vaults.” The report indicates that major banks in Europe and Japan are… Read More »