Posts filed under “Fixed Income/Interest Rates”
From Deutsche Bank:
A striking feature of my ongoing discussions with clients is that many still believe that as a result of secular stagnation “long rates will never go up”. The problem is that holding onto that view has been expensive for the past seven weeks. Long rates in the US are driven by 1) US fundamentals, 2) Fed communication, and 3) demand for Treasuries from abroad, and it is the outlook for the rest of the world that has been a key driver of US rates recently (see also the chart in my Monthly chart book with Fed and ECB expectations). And investors are not only revising their view on the outlook for Europe at the moment. In Japan, up until H1 2014, the recovery was led by non-manufacturers and mid-sized and small companies but we are now beginning to see a broader recovery in 2015, including in capex, and the chart below shows that cash holdings in US companies are lower than cash holdings in European companies, which again are holding much less cash than Japanese companies. The bottom line is that developments over the past seven weeks show that US rates investors should be spending less time thinking about secular stagnation and instead spend more time thinking about the outlook for the rest of the world, because it is a revision of the outlook for the rest of the world that seems to be driving US rates at the moment. For more on the outlook for Japanese capex see our latest write-up here.
Where has all the stock market volatility gone? U.S. equities have been surprisingly quite the past three years. There hasn’t been a one-day change of 2 percent or more in the Standard & Poor’s 500 Index since December, Bloomberg News reported. Data compiled by Bloomberg and Deutsche Bank AG note that this is the longest such streak…Read More
The Fed Raising Rates? David Kotok Cumberland Advisors, May 26, 2015 It’s not about when; it’s about the path to get there. Suppose the Fed lifts rates on the short end of the yield curve by a quarter point in September. Or December. Will it really make a difference? Suppose the Fed’s…Read More
Why Are Interest Rates So Low? Marco Del Negro, Marc Giannoni, Matthew Cocci, Sara Shahanaghi, and Micah Smith Liberty Street Economics, May 20, 2015 In a recent series of blog posts, the former Chairman of the Federal Reserve System, Ben Bernanke, has asked the question: “Why are interest rates so low?” (See part 1, part…Read More
Bond Tantrum or Schnitzel Tantrum David R. Kotok Cumberland Advisors, May 14, 2015 “tan’trum, n. [earlier form tantarum suggests pseudo-L. coinage on tantara.] a violent, willful outburst of annoyance, rage, etc.; a fit of bad temper.” Source: Webster’s Deluxe Unabridged Second Edition. Tantara is the Roman word for the blast of a horn…Read More
Get in your car and go for a drive just about anywhere in the U.S. You will be confronted with a transportation system desperately in need of a reboot. I’m not referring to a full upgrade to smart roads — the sensor-driven intelligent system that promises to move vehicles more cheaply and efficiently. Rather, I…Read More