The September Federal Reserve meeting provided few surprises, but ongoing uncertainty about the Fed's next move may mean more volatility ahead.
Competing narratives have emerged to describe the state of the U.S. economy.
We expect yields to fall later this year and into 2024 as inflation continues to cool.
Will the economy roll into a formal recession, or is a recovery underway? It's a close call.
The surprise move takes the rating to AA+ from AAA.
In a unanimous decision, Federal Reserve policymakers raised the federal funds rate to 5.5%, the highest point since 2001.
As summer temperatures peak, inflation just won't completely cool down. The question is how much more the Federal Reserve should do about it.
Now that short-term Treasury yields have reached 5%, further upside is likely to be limited.
Sometimes it feels like the economy and markets are on different tracks.
Despite high volatility in the bond market during the first half of the year, what's surprising is how much didn't change.
Political brinkmanship in Washington adds to concerns about the economy.
The central bank likely won't have enough reason to hike rates again this cycle. In fact, we wouldn't be surprised to see one or two rate cuts later this year.
What does a potential change in Federal Reserve policy mean for markets and the economy?
Investors continue to seek signs of a change in season—and clues about how the Federal Reserve might react to it.
Inflation trends are moving in a favorable direction, but the change is likely too slow for the Fed to take its foot off the brake anytime soon.
A trifecta of factors support the dollar, including the relatively strong performance of the U.S. economy, tightening monetary policy by the Federal Reserve, and safe-haven buying.
The Federal Reserve's pledge to curb inflation appears to have resonated with the market.
The Federal Reserve announced a 25-basis-point increase in the target range for the federal funds rate, to a range of 0.25% to 0.50%, its first rate hike since December 2018.
The Russian invasion of Ukraine overturned a lot of assumptions about the near-term direction of the global economy.
In recent weeks, it has felt like the U.S. stock market slips a gear every so often, dropping sharply as investors search for traction in uncertain terrain.
The Federal Reserve dealt the bond market a sharp body blow on January 5th with the release of the minutes of its last Federal Open Market Committee (FOMC) policy meeting in December 2021.
Some of the market’s recent pressures are showing signs of easing.
Ever since the Federal Reserve started hinting it was planning to end its ultra-loose monetary policy, bond yields have been falling. That it happened in a booming economy with the highest inflation readings in nearly 40 years has taken a lot of investors and analysts by surprise.
The bond market has been in hibernation for months, and investors may have become complacent about risks.
Now that the dollar is near the year’s highs, can the rally continue? We believe it can in the near term, although our longer-term view is more nuanced. Here’s what we see ahead.
As the Federal Reserve transitions from merely talking about tapering its bond holdings to actually tapering, investors may be left wondering what it might mean for the markets and their portfolios.
Although the prospect of the Federal Reserve tapering its bond purchases has unsettled markets in the past, we expect it to be more orderly this time around.
To get the facts, sometimes you need to look beneath the surface.
A boom in spending has stirred fears of economic overheating, which has coincided with a surge in commodity prices and a lift in traditional inflation metrics.
With commodity prices soaring, money supply growth exploding, and government spending surging, there is a palpable fear of a return to 1970s-style inflation.
We are often asked if the U.S. dollar will lose its status as the world’s reserve currency.
U.S. economic growth is accelerating as vaccinations rise and social-distancing measures ease, but hopes for a long-lasting spending boom may hit a couple of speed bumps. Vaccine rollouts in major countries are proceeding at different speeds, but stock market performance contradicts what vaccination data would seem to imply for investors. Meanwhile, inflation-adjusted longer-term Treasury yields have risen as investors anticipate stronger economic growth.
The late-February spike in U.S. Treasury bond yields sent ripples throughout the global markets. As yields surged to the highest level in a year, stocks and commodities sold off sharply, while the dollar rallied.
Hope is high that economic growth will accelerate as more people are vaccinated against COVID-19, but so far economic data has been lackluster. Meanwhile, bond investors are expecting inflation despite signs that the economic recovery’s momentum may be stalling. Why does everything seem so disconnected?
The new year kicked off with a sharp rise in Treasury bond yields, despite unprecedented political turmoil and signs that the economic recovery is slowing.
U.S. stocks have continued to climb amid optimism about a vaccine-led economic recovery, but it’s a narrow path—buoyant investor sentiment could easily be deflated by bad news. Although global economic growth has struggled, an acceleration in vaccinations in major countries could support stronger growth in the second quarter.
Encouraging news about COVID-19 vaccines has boosted hope for stronger economic growth, kicking off a rotation in stocks and equity sectors as investors look to a brighter future. However, near-term volatility is possible, as we’re not yet out of the coronavirus tunnel.
Ten-year Treasury bond yields may rise as high as 1.6% in 2021, reflecting prospects for faster economic growth.
Actual third-quarter earnings may be less important than what business leaders say about their expectations.
There are many major policy decisions that will influence the outlook—trade, energy, taxes and budget deficits, and pandemic relief. However, it’s difficult to assess how these issues will be addressed post-election, and even more unpredictable how the market will react.
Given current low yields, some investors wonder whether bonds can continue to provide diversification in a portfolio. Here’s why those fears may be overblown.
The U.S. stock market hit pause in early September, as investors took a harder look at market overconcentration and frothy sentiment. Meanwhile, global economies may be entering a new phase, and the Federal Reserve’s newly announced inflation policy is likely to keep U.S. rates lower for longer.
The move away from a precise 2% target likely means short-term rates will stay lower for longer.
Treasury bond yields have been drifting quietly lower since early June. But there is more going on beneath the surface than it might seem at first glance. Real yields—nominal yields less inflation—have declined steeply into negative territory. While nominal yields are near record-low levels from the deep economic decline, inflation expectations are picking up.
Although certain high-frequency data haven’t improved markedly, the threat of the virus has started to recede.
The U.S. dollar has fallen by about 7% against a broad basket of currencies since its mid-March peak. After a nearly decade-long bull market that saw it appreciate by more than 40%, we believe the dollar could be headed for a longer-term decline.
Investors must balance ongoing risks of the coronavirus against the extra yield the bonds provide.
U.S. stocks have been fairly resilient lately, even as coronavirus hotspots flare up around the country. Although consumers and businesses are increasingly worried about rolling shutdowns, major stock indexes generally have moved sideways. How long can this continue? Much depends on the shape of the economic recovery.
Returns for most fixed income asset classes are positive so far this year, but the numbers mask the rocky road markets have traveled since January.