interest rates

Hiking rates now after a monster commercial real estate cycle has already developed is akin to closing the stable doors after the horse has already bolted. But this may be a concern of the Fed. Let’s see what the Spring 2017 OCC Risk…

In my most recent posts, I have been saying that bond markets are pricing in secular stagnation scenarios based on how shallow the yield curve is. But secular stagnation is a policy choice. And that is something I thought I should highlight…

There are several threads I want to comment on in the wake of the UK general election. And from an economic standpoint, the conclusion that follows is that austerity in the UK has now lost its appeal politically. It also means lower yields…

The US economy has been very resilient during this post-crisis business cycle, as we are now into our ninth year of economic expansion. Soon we could hit a record for the length of an expansion. Yet, with that backdrop, 10-year Treasury…

The Eurozone economy is doing really well. Some data points to 3% growth. The German economy is doing even better – with some data pointing to 5% annualized growth. But there’s a downside – overheating. And with the ECB at negative rates…

We are seeing decent selling in today’s US equity markets, with the VIX up some 25%. And most people are pointing to the Trump scandals. But this is only one day. What is happening with Trump – while negative - will not change the arc of…

Remember the debates about structural unemployment back during the beginning of this recovery. The question was whether policymakers would write off a whole cadre of workers as ‘unemployable’ and formulate policy as if they weren’t…

As we await the US jobs data, it bears remembering that oil is a big wildcard both on in terms of consumption and investment. Right now, oil is plunging, down as much as $14 a barrel for the Brent variant and $17 a barrel for WTI since…

With demand for long-dated safe assets high, the yield curve will remain under flattening pressure. And that, combined with higher short-term rates will be negative for bank net interest margins and earnings.

Given recent hawkish Fed statements and the potential for even more than three hikes, all of this is bullish for longer-duration Treasuries but much less so for auto ABS, high yield and emerging markets.