Category Archives: Fixed Income

Your Expectations Are Being Managed… by the Fed

Economists agree that what people expect the future to bring helps determine the economy’s future.  Expect prices to rise? Buy in advance.   Expect everyone to invest in that hot stock?  Go online and buy the stock now. Expect the Fed to keep interest rates so low money is almost free? Take some risks, buy that Read more […]

Fixed Income Laddering

The Federal Reserve’s decision to continue its monthly stimulus purchases on Sept. 18, 2013, had a euphoric effect on the markets, as the S&P 500 immediately rose from 1702 to 1715, eventually closing the day at 1726. Treasuries reacted to the news in the same way, as yields on the 10-year Treasury went from 2.86% Read more […]

Municipal Bonds Bounce Off Bottom

The US Municipal bond market has bounced off its recent bottom even as two anchors continue to weigh it down: Puerto Rico and tobacco settlement bonds. Investment grade tax-exempt bonds tracked in the S&P National AMT-Free Municipal Bond Index have seen a 2.32% positive total return since it’s year to date low on September 5th Read more […]

Looking for What Works at the Fed

The FOMC, the Fed’s policy makers, meet Tuesday and Wednesday this week.  For investors the key agenda items are tapering and the future of QE3. Interest rate policy is almost forgotten as everyone prepares to scan the announcement expected at 2 PM Wednesday and then rush to either buy, or sell, bonds.  Market pundits seem Read more […]

Tapering Away

Next week the Federal Open Market Committee, meeting for the first time since July, is widely expected to announce the tapering of its quantitative easing program.  Whether the Fed begins to reduce its bond purchases now or later this year, most observers recognize its inevitability.  Indeed, as we’ve noted before, even the anticipation of tapering Read more […]

Puerto Rico Munis…have they hit bottom?

The S&P Municipal Bond Puerto Rico Index ended September 10, 2013 down 19.14% total return year to date which was up slightly from the previous day.  Its too early to tell if  these bonds have hit bottom.  Puerto Rico municipal bonds have been weighing on the muni market since mid July. Join S&P Dow Jones Read more […]

Jaw-Boning at the Fed

When the FOMC minutes were released on Wednesday (August 21st) at 2:00 PM analysts and investors combed through all ten pages looking for some hint of when QE3 might be tapered or what new trigger was be watched by the Fed.  This was old news from a time capsule:  The meeting was three weeks earlier Read more […]

Holding Bonds As Rates Rise

This week’s FOMC minutes revealed that almost all the members of the committee agreed that it was not yet time to begin tapering the Fed’s asset purchases. Many committee members urged additional caution, and advocated waiting until more concrete evidence about the economy’s recovery was available. The report continued to explain that the members generally Read more […]

Index Rehab: Is Backwardation Back In-Style?

My colleague, David Blitzer, is discussing index construction in his blog series “Inside the S&P 500”, and so far has reviewed selecting stocks and the float adjustment. While the index construction principles of transparency, liquidity, and systematic rules-based methodologies are widely similar between equities, commodities and other asset classes, there are details that distinguish the asset Read more […]

That Was Easy

If every month were like July, equity investors would have an easy life.  The most striking thing about July’s U.S. equity market performance was how consistently good it turned out to be.  The S&P 500 was up +5.09%, with the Mid Cap 400 ahead of that pace (+6.20%) and the Small Cap 600 further ahead Read more […]