Markets

Safe assets are in short supply. If the US government shuts down for a long time, there will be a flight to quality. And the lack of safe assets will support the Treasury market.

Here is further evidence that in this environment treasuries are driving "risk asset" valuations. Corporate HY bond spreads are now positively correlated to treasury yields. That's quite unusual because traditionally when treasury yields…

QE is still on, but central banks are pondering exit pathways. Exit requires vacuuming up excess reserves, winding down massive securities holdings, and restoring normal interest rates – all without killing the recovery. This column points…

The Bank of Japan was able to lower Japanese government bond yields after an unexpected spike earlier this year (see post). The 10yr JGB is now yielding around 70bp, corresponding to about minus one percent of real yield.

One could argue that home-buyers are ignoring higher rates, but that doesn't seem likely. Is this spike driven by capitulating buyers who had been waiting on the sidelines for mortgage rates to drop? That strategy had certainly worked in…

To put it mildly, the Fed’s dovish surprise has many implications for the market. The first is that the Fed is very concerned about the backup in US rates, and the negative impact on the economy. - The second major implication is that…

This is crazy. John Carney tells us that not only are homes now growing increasingly less affordable, but the psychology of the US housing market is changing to one of the fear of being priced out. Frankly, I can't believe we are here…

While yields on treasury notes and bonds have risen across the board in 2013, the jump in rates has been uneven. The 5-10-year rates - the "belly" of the curve - have increased materially more than other maturities.

The latest data seem to suggest that China has so far been able to elude the severe economic headwinds faced by other emerging economies. Signs of stability have been around for a few weeks, but the first set of direct evidence came from…

We update our views on the main big picture drives for financial market: (1) Fed tapering (2) The stabilization of the Chinese economy (3) The cyclical recovery in Europe (4) The increase in Japanese purchases of foreign bonds