Tag Archives: Fed

Yield Curve Anxiety

The slope of the yield curve is a good recession predictor. When the curve is inverted – when the yield on three month T-bills is greater than the yield on the ten year T-Note – a recession is imminent. Similar signals can be seen if the T-bill is replaced by a two- or three-year T-Note Read more […]

Inflation: Benign for Now

Having broken through 2% in January 2018, the 10-year U.S. Treasury breakeven rate (as measured by the difference between the S&P U.S. Treasury Bond Current 10-Year Index and the S&P U.S. TIPS 10 Year Index) has continued to increase, reaching a YTD high of 2.18% on April 23, 2018. As of May 14, 2018, the Read more […]

Turning Point in Bond Yields

The ten year Treasury note closed with a yield over 2.5% this week, sparking talk that interest rates may have bottomed. The first chart shows the yield on the 10 year treasury going all the way back to 1953.  As seen there, the bottom in July 2016 at 1.5%. Last March the yield was 2.5%, Read more […]

Rising Rate Implications for Japanese Investors

The Fed raised rates for the third time this year, bringing the benchmark Fed Fund Target Rate to 1.25%-1.50%, as expected. U.S. Treasuries outperformed Japanese sovereign bonds in 2017, while U.S. Treasuries’ volatility also came down to one-half of the previous level. As of Dec. 13, 2017, the S&P U.S. Treasury Bond Current 10-Year Index Read more […]

Inflation, Rising Rates Can Spark Oil’s Rebound

In anticipation of the Federal Reserve’s policy meeting starting Wednesday that may raise the federal funds target rate, here’s what you need to know about how the decision impacts commodities. Historically rising interest rates are positive for commodities for two main reasons.  One is the return on collateral increases, pushing up the total return. The other reason Read more […]

Gold & Silver: Fed Rate Hike Vs Mine Supply

Two factors tend to consistently influence gold and silver — interest rate expectations and mining supply.  Changes in interest rate expectations typically exert a short-term, day-to-day influence that is exogenous to the metals market while mining supply has a long-term, year-to-year influence that is endogenous. Precious metals prices seem to exert little to no influence Read more […]

The Fed: No Change In Rates Amidst Puzzling Policies

Questions and some answers on issues facing, or created at, the Fed Raise Rates? Not very likely next week at the September 21st FOMC meeting.  Recent data including August jobs report, declines in Industrial Production and Retail Sales and comments from FOMC members argue against a move now.  The November 2nd meeting is just days Read more […]

What’s Next from the Fed

Last weekend the Federal Reserve held its annual symposium at Jackson Hole Wyoming and discussed near and longer term monetary issues. No Rate hike in September There are three FOMC meetings remaining this year: September 21st, November 2nd and December 14th. While there is no rule that all interest rate target changes must come at Read more […]

Oil’s Price Rise Boosts All Equity Sectors, But One

The S&P GSCI Crude Oil Total Return is up 15.2%, its biggest six day gain, ending Aug. 18, 2016, since the six day gain of 16.1%, ending on Apr. 13, 2016.  As both the IMF (International Monetary Fund) and IEA (International Energy Agency) consider the oil price as a major input to global GDP estimates, and the IMF states the Read more […]

The Fed’s New Normal

Since the demise of Bear Stearns and Lehman Brothers in 2008, Federal Reserve policy has focused on containing market turmoil and disruption.  Current Fed policy built on a massively expanded balance sheet (first chart); the quantitative easing that inflated the balance sheet and the Fed funds rate glued to the zero lower bound (second chart). Read more […]