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The ‘interregnum’ of risks to the upside as yields turn down
Just now, I was looking through the Credit Writedowns archives, searching for the phrase "to the upside" because, today I am thinking about risks being upside risks rather than downside risks. The data released this morning confirm that.…
More on inflation, the mutant wave in Canada, the stall in rates and the new normal
This post is a bit of a catch all on what's happening right now because there is no dominant theme consuming markets. After the spike higher in rates, we have seen the first real consolidation wave. And so the trends that drove market…
The inflation bogeyman and the Fed reaction function
Listen, the big news today is that, yesterday, I got the first shot of a two-shot Pfizer COVID-19 vaccination dose. I feel well less than 100% today to be honest. But my spirits are good. The next appointment is in three weeks. Within a…
Context for my bullish outlook in the US
Happy Tuesday!
For me, it's actually like a Monday because I took a 5-day holiday over Easter and am coming back to work today with relatively fresh eyes. So, let me make this a longer post, telling you what I am thinking and why I am…
Bullish news on the US jobs front
Real quick on this Good Friday
The US jobs report for March was superb. We got everything we wanted to see except an improvement in hourly earnings. In my view, this report bolsters the case for upside risk for the economy and inflation…
Some reasonably bullish thoughts on the fourth US wave
The headlines I'm seeing this morning are downbeat. They point to an imminent coronavirus wave from mutant strains and a continued rise in interest rates, two outcomes I have warned about. But I am 'looking through' these headlines because…
Jobless claims under pre-pandemic peak for first time
Last week's initial jobless claims figure was unexpectedly low at 684,000 versus expectations for 730,000 and 781,000 the prior week. While this is just one week's numbers, it is the first time that claims have been under the pre-pandemic…
Covid-19 waves, EM canaries, and large cap tech optionality
As the new week begins, I have three subjects I am focused on. The first is the coronavirus, where the mutant-inspired infection wave I have expected is forming. The second is emerging markets, where the increase in the US dollar is…
On the Fed’s playing chicken with the bond vigilantes
Yesterday the US Federal Reserve Open Market Committee released a policy statement that it has decided to stay the course on accommodative monetary policy through zero rates and quantitative easing. It provided absolutely nothing in terms…
Short-covering in Treasuries and a third wave in Europe
I expect to see more of the bear market in bonds in due course. Eventually, I think it's the sell off in Treasuries that will force the Fed's hand. But right now, that is a crowded trade. We've got some negative Covid-19 data out of Europe…