monetary policy

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…

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…

Fed Governor Jerome Powell recommended a June hike and 2017 balance sheet reductions, in one of the last public speeches by a Fed official before the June FOMC meeting. When the Fed follows Powell’s game plan, we will be in the unchartered…

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.

The 98,000 jobs added to payrolls in the US in March were well below the consensus estimate of 178,000, especially when you consider downward revisions to January and February totalled 38,000. I don’t believe this matters for the Fed…