Credit Writedowns

I've talked about 12-18 between curve inversion and recession months as a rule of thumb. That gives you at least a year to rotate your portfolio and get defensive.

At least initially, rate increases can be procyclical. Moreover, in this particular cycle, fiscal and regulatory policy are acting procyclically too. That means you need a lot of rate hikes to get a big anti-cyclical effect.

Since Emmanuel Macron’s election as French president in May 2017, hope has lingered that a mythical friendship between France and Germany will help complete the gaps in the euro area architecture. As this column discusses, however, history…

The yield curve has steepened to where 10-year yields exceed 2-year yields by 52 basis points. While this may seem like a case of market whiplash, it's not. It's what should be expected in a late cycle rate hike regime.

Global growth has been slowing. But we have plenty of time before a recession or financial crisis hits. My worries are about financial fragility caused by high asset prices and corporate releveraging.

Links on bonds, the yield curve, trade and much more

We should expect the Fed's tightening to continue. But a lot of the recent incoming data has been soft. And while this may just be a blip, I expect the curve to flatten further by mid-year.

The possibility of the Fed causing the curve to invert is real. We will have 12-18 months at most to see what happens economically.

With Europe, when the economy turns down, that’s when the acrimony will be greatest. And that’s when I would worry about really bad outcomes.

Normally, we think of trade as a story of spendthrift nations 'living beyond their means' and saver nations being productive. In this view, savers are virtuous and spenders are sinful. And the easiest way to see who the saints and sinners…