We still prefer bonds despite the frustratingly flat YTD performance (aggregate bond ETF), and despite our longer-term skepticism. The flow of soft economic data continues to make a recession a high probability. Recent revisions to labor data and the banking stress have raised confidence in the cautious view. In our 2023 Outlook, we highlighted a […]
yield curve
Debt Ceiling & Liquidity
The current debt ceiling morass should add liquidity into the economy and markets in the short term. The added liquidity, along with Fed pivot enthusiasm, is clearly supporting higher asset prices currently. This is ironic as not resolving the debt ceiling in a timely manner increases market risk, and it highlights the unsustainable debt picture […]
Fed’s 2% Inflation Target
It is clear to us that inflation has peaked, but getting inflation down to the Fed’s 2% target will be a challenge. It’ll be a challenge for our overly indebted world to sustain 5-6% interest rates for a prolonged period, which is the Fed’s guidance. However, there’s plenty of financial liquidity sitting on the sidelines […]
Market Tea Leaves for 2H22
As July approaches, let’s read the market tea leaves for 2H2022 and beyond. Over the past few weeks, markets have priced a broader growth scare as commodity equities sold off sharply and Treasuries priced a lower and earlier peak in Fed Funds rate. However, bonds markets were blind to the inflation surge, so why should […]
Explosion of Crypto Legislation Proposals
There has been an explosion of crypto legislation proposals from US politicians. The bogeyman of late has been sanctions evasion, even though the Treasury Department has repeatedly said that there’s no sign of evasion via crypto. Many of these proposals are unlikely to see the light of day in current form in our polarized political […]