Tag Archives: Fed

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 […]

Expect more starting and stopping at the Fed on Interest rates.

Given the FOMC minutes released yesterday we expect to see two rate increases in 2016. The next move is likely to be in June, not at the April 27th meeting. Some analysts blame disagreements within the Fed for what they see as inconsistent and changing policy.  While it is difficult to anticipate short term market Read more […]

Floating Securities in Advance of Rising Rates

This Wednesday, the Fed announced that they would begin raising rates, a decision that has left many investors with questions about how they will fare in this changing environment.  Knowing that conventional, fixed-rate securities sometimes lose value when interest rates increase has some investors looking to floating-rate securities instead.  Floating-rate securities are designed to mitigate Read more […]

New Risk-Off: More Fear Today Than Tomorrow

It has been over nine years since the Fed raised interest rates, but today, the Fed raised rates just as expected. While the Fed actions have been well telegraphed, and interest rates are probably the least of worries for commodities, there is one measure that might be worrisome. Although since 1991, rising rates seem not to have Read more […]

The Highs and Lows of the High Yield Energy and Materials Sectors

The S&P U.S. Issued High Yield Corporate Bond Index has just over USD1 trillion of par amount outstanding while its total return is down 3.11% for the month and down 4.51% YTD.  The energy and materials sectors have been the sore spot for the high yield market, given the anxiety over credit quality, as current low Read more […]

Embracing Rising Interest Rates

Floating Rate Instruments can make a lot of sense in a rising interest rate environment In my May 19 blog, I mentioned two strategies that investors could consider in a rising interest rate environment. Given the recent direction of short-term interest rates, I believe the information bears repeating with updated numbers. Interest rates have been Read more […]

Rising Interest Rates May Not Have an Immediate Impact on Senior Loan Rates

Following months of uncertainty, the U.S. Federal Reserve has indicated that there could soon be a hike in the Federal Funds Target Rate.  Interest rates have been kept in a range between zero and one-quarter of a percent since December 2008 and have not risen since June 2006. As interest rates have been at historically Read more […]

Dollar’s Revival Adds New Life To These Commodities

It makes sense that a strong US dollar is generally bad for commodities since as the U.S dollar strengthens, goods priced in dollars become more expensive for other currencies. However, historically the U.S. dollar has a negative correlation of only about -0.30 with the S&P GSCI as shown in the chart below using data since 1970: This may Read more […]