December 31, 2024 | The US Treasury bond began the month with some follow-through on breaking a 4 standard deviation long price decline from early September, but the rally reversed course when it began to sense a more hawkish Fed later in the month . . .
November 30, 2024 | The Fed must deal with a very challenging and continuing pricing conflict between excess fiscal spending (i.e., ongoing UST debt issuance) not being aligned with its goal and now the risks of import tariffs pushing prices to recapture some tariff cost . . .
October 31, 2024 | After having been exuberantly fixated on any news that favored rate cuts and having bullied the Fed into cutting rates by 50bps, the market quickly reversed course when labor markets pivoted with strength and inflation wouldn’t go away . . .
September 30, 2024 | The US Treasury bond market rallied strongly right into the very important (and greatly anticipated) mid-month Federal Reserve policy meeting where the federal funds rate was cut by 50bps after a 14-month pause . . .
August 31, 2024 | There is no question that the Fed’s dual mandate to manage a balance of risks between labor and inflation is shifting more to the labor side of the challenge, though inflation is still higher than the Fed would like it to be . . .
July 31, 2024 | The concerns over conflicting signals between some cooling in the economy and sticky inflation began to wear off as signs of labor market weakness came into focus . . .
June 30, 2024 | The theme for the street was a general deceleration in the speed of expectations for cuts, which basically took July off the table and delayed cuts until November . . .
May 31, 2024 | Disinflation confidence waned with comments such as, “It looks like it will take longer for us to become confident that inflation is coming down to 2% over time,” according to Chairman Powell . . .
April 30, 2024 | The US Treasury bond slid in April amid hotter than expected consumer inflation data which caused policymakers to doubt their confidence in the disinflationary trend especially given the ongoing strength in financial conditions . . .
March 31, 2024 | The US Treasury bond market was faced with more sobering inflation data this month which is becoming an ongoing concern to those who were hoping for rate cuts to be fast and furious . . .
February 29, 2024 | We continue to emphasize that the Fed and markets must deal with a very challenging pricing conflict created by ongoing excess fiscal spending (i.e., ongoing UST debt issuance) not being aligned with the Fed’s desire to gain confidence in its disinflationary goal . . .
January 31, 2024 | Chairman Powell has put emphasis on being “confident” on inflation, but the committee is “not there yet” and said, “March isn’t the base case” . . .
December 31, 2023 | The US Treasury bond market completed its 2nd biggest two-month rally since 2011’s risk-off move on Europe’s sovereign crisis as the mood continued to be jubilant over the Fed’s indication that it is done raising rates . . .
November 30, 2023 | A Fed conundrum: If the Fed cuts rates too soon it could impair its credibility and forfeit the effectiveness of forward guidance in recruiting markets to assist it; but if the Fed leaves rates too high for too long it could prompt a fiscal fit . . .
October 31, 2023 | The US Treasury bond market continued to trade lower after experiencing its weakest month of the year in September and scoring its 6th straight monthly decline . . .
September 30, 2023 | The US Treasury bond market experienced it weakest month of the year scoring its 5th straight monthly decline which sent yields up to their highest levels since before the Great Financial Crisis . . .
September 20, 2023 | It’s no longer your grandmother’s preferred stock market of fixed-rate perpetuals in utilities and railroads . . .
August 31, 2023 | The Fed’s messaging on more rate hikes was mixed leaning into moderately hawkish according to our interpretation of the numerous board member comments throughout the month . . .
July 31, 2023 | The US Treasury bond markets were heavy in July, but credit prices rose again to further tighten spreads in a UST vs. credit yield twist . . .
June 30, 2023 | The US Treasury bond market was a bit heavy in June, but credit prices rose helping to tighten spreads. The Fed paused on its rate hikes in June but signaled that there are still more hikes to come . . .
June 16, 2023 | If the Fed is not done raising rates, most of the market’s job should be complete, nonetheless. The Fed’s ongoing balance sheet reductions are the backstories creating friction to aggregate demand while the rate hikes are getting all the headlines . . .
May 31, 2023 | The bond markets were heavy in May with US Treasury prices retreating and giving back much of what they gained from the risk off flight which resulted from the regional banking system’s deposit challenges . . .
April 30, 2023 | The bond markets were choppy and mixed in April with US Treasury prices continuing to absorb the impact of the regional bank system’s deposit flows . . .
May 8, 2023 | All necessary LIBOR reference rate guidance is in place for a smooth transition to a Secured Overnight Financing Rate (SOFR) based replacement benchmark. Morgan Stanley surprised the market with a legal interpretation of certain “fallback language” on some preferred stock issues that will keep the original coupons fixed-for-life rather than switching to a new floating rate dividend as labeled on the prospectus . . .
March 31, 2023 | The bond markets were very mixed in March with US Treasury prices impelled higher from a run in the US banking deposit system and junior subordinated bank debt impaired as a result. The Fed & the FDIC joined to quickly restore sufficient confidence in the banking system with a liquidity program and some deposit guarantees . . .
March 22, 2023 | Liquidity and risk to liquidity drive the confidence in the financial system and confidence drives the cost of capital. The Fed (and other central banks) manipulate the cost of capital with policy rates and balance sheet exercises that can cause negative feedback loops when rates rise materially and quickly . . .
March 16, 2023 | A “Sunday Solution” was executed by the Fed, Treasury & FDIC to restore confidence in the banking system and save uninsured depositors . . .
February 28, 2023 | The bond markets declined in February, which ushered in a modest correction of what was an extraordinarily powerful bond market last month . . .
January 31, 2023 | The fixed income credit market performance was extraordinary in January as temptations of almost record high yields became too cheap to ignore invoking fears of missing out which impelled a powerful bond market rally . . .
December 31, 2022 | The fixed income credit markets were mixed in December as the Fed continued to emphasize that interest rates would be high for longer than markets appear to expect . . .
November 30, 2022 | The fixed income credit markets rallied after the Fed hiked the federal funds rate for the fourth straight time after it appeared that the pace of hikes would soon slow . . .
October 31, 2022 | The fixed income credit markets continued to weaken as yields rose along the same trendline as September, August & July. The term of this negative trend in 30yr US Treasury long bonds is now 6.0 standard deviations long . . .
September 30, 2022 | The fixed income credit markets continued to weaken as yields rose along the same trendline as August. The impetus for the price declines was the Fed’s strong messaging that it will continue to raise interest rates until it gets the job done on inflation . . .
August 31, 2022 | Though there was no Fed meeting to report on this month, the messaging from Chairman Powell at Jackson Hole confirmed the market’s conviction on more rate hikes to come . . .
July 31, 2022 | The fixed income credit markets zoomed all month after the Fed set up what seemed to be a more dovish tone to policy in June despite inflation still being out of control. The Fed hiked another 75bps at the end of July and indicated that the outsized moves higher would be waning – perhaps that is viewed as “dovish” . . .
June 30, 2022 | The fixed income credit markets opened June under the pressure of soaring Fed hawkishness -- mainly, its potential to accelerate rate hikes above the more “customary” 25bp increments to as much as 75bps, which it did . . .
May 31, 2022 | The fixed income markets opened May under the same pressure that plagued markets during April. Credit, in particular the retail preferred market, rallied along with the equity market as a modest rally in US Treasuries helped ally some of the more extreme fears about the Fed’s hawkish resolve to combat zooming inflation . . .
April 30, 2022 | The fixed income markets came under renewed and significant pressure in April, after getting somewhat of a relief last month (though still negative) only because the decline was tempered by tighter spreads – particularly in hybrids. April reversed the spread gains in hybrids (corporates too) and pushed them back to revisiting their wides for the year set in early March . . .
March 31, 2022 | The fixed income markets came under continued pressure in March, which completed the 3rd worst quarter for the US bond markets since the financial crisis recovery in 2010 . . .
February 28, 2022 | The significant repricing of fixed income continued in February. This was the worst 2-month period on record for preferred securities, except for the coronavirus blow-off (which we consider to be well outside of the “normal” curve) . . .
January 31, 2022 | This was the worst start to a new year since 2009 and one of the worst overall months on record for preferred securities. There have been worse months (e.g., March 2020 when COVID hit markets), but when considering that there was nothing necessarily abnormal happening to disrupt credit fundamentals, this move requires some explanation – inflation . . .
January 20, 2022 | Bond markets are not accustomed to the US Federal Reserve Bank raising rates for the wrong reasons (i.e., to fight zooming inflation) . . .
December 31, 2021 | Credit came roaring back in December after the blowoff last month. The news this month again centered on the Fed and its increasingly hawkish tone coming from its meeting this month . . .
November 30, 2021 | Credit performance was negative in November as Fed jawboning over inflation frustrations grew and a new coronavirus variant (Omicron) injected new fears around the globe. The big news (though expected) was the Fed’s announcement of its taper which would run-off to zero by July if the current pace it to continue . . .
October 31, 2021 | Credit performance was negative in October as expectations grew for a more hawkish Fed and a taper by November . . .
September 30, 2021 | Credit performance in September was certainly mixed as the month started strong with multiple oversubscribed new issuances, but a hawkish Fed gradually damped the euphoria of every new deal being expected to move higher . . .
August 31, 2021 | Credit performance was mixed in August as US Treasury prices slipped as the ongoing theme of the Fed’s bond buying began to shift toward increasing taper odds . . .
July 31, 2021 | Credit prices were mixed as US Treasury prices rose in July in a continuing theme of the Fed ongoing bond buying with no hint of taper timing . . .
June 30, 2021 | Credit and US Treasury prices went up in June as the Fed indicated more fear of inflation than it had led on in its repeated dismissive pronouncements since March . . .
June 21, 2021 | Components to President Biden’s tax plan seek to eliminate the long-term capital gains tax benefit for wealthier investors and the Qualified Dividend Income (QDI) benefit, as a result . . .
May 31, 2021 | Credit and US Treasury prices went up in May though spreads slipped a bit. The move up in longer dated treasuries was modest as most of the market’s mood was influenced by an inner voice of Chairman Powell whispering “we need substantial further progress” . . .
April 30, 2021 | Most credit prices went up in April and spreads moderately tightened as US Treasury prices rose after a record blow-off last quarter . . .
March 31, 2021 | Most credit prices went sideways and spreads moderately tighter as US Treasury prices hit lows for the year toward the end of March . . .
March 23, 2021 | Bear markets typically begin cloaked in a spirit of denial. Confutation can be virtuous because decline owns up to problems and making a change to solve them is often too painful . . .
February 28, 2021 | Most credit prices deteriorated under the weight of the US Treasury bond market repricing in February . . .
January 31, 2021 | Credit prices deteriorated this month because the US treasury yields rose from the January refunding weight. Yields in junior subordination rose too, but more from the technicals of treasury yields than from any fundamental change in credit . . .
December 31, 2020 | Credit prices continued to improve in December closing out a concerning year for public health yet a remarkable year for financial markets . . .
November 30, 2020 | Credit prices improved remarkably this month as the mood for the US economy received a booster shot from news of promising COVID-19 vaccines becoming available this year . . .
October 31, 2020 | Credit prices improved modestly this month as the US economy continued to rebound but weigh on US Treasury prices. Yields in junior subordination edged lower and spreads tightened against higher Treasury yields . . .
September 30, 2020 | Credit ran a modest correction in September with the hybrid markets slipping the most as US Treasury securities marginally improved. Yields in junior subordination rose and spreads widened in a modest risk-off mood . . .
August 31, 2020 | August was certainly another good month for hybrid securities, but not so good for US Treasury securities – in particular, treasury duration . . .
July 31, 2020 | The Coronavirus pandemic is still compounding around the globe weighing far more on real economies and politics than on financial assets . . .
June 30, 2020 | New issuance pace was still sweltering like in May despite the gloomy economic outlook dropped by the Fed, which caused an equity correction . . .
May 31, 2020 | The Coronavirus (COVID-19) still weighed heavily on the global economy in May despite asset prices making a V-shaped recovery – for this, we can thank the central banks . . .
April 30, 2020 | The Coronavirus (COVID-19) has crushed the global economy despite asset prices making an astounding recovery this month. Initial jobless claims since mid-March have zoomed to over 33.4 million . . .
March 31, 2020 | The arrival of COVID-19 in the US has caused the most severe impact to the US economy since the Great Depression as virtually the entire country is under some form of operating limit, lock-down and social distancing . . .
March 10, 2020 | Global Financials are Well Positioned for the Macro Challenges . . .
February 29, 2020 | The Coronavirus (COVID-19) has indeed reached the United States and has caused a major health scare alert that rattled markets this month . . .
January 31, 2020 | Junior subordinated capital securities continued to attract buyers this month as the equity market rallied and US Treasury bond yields edged modestly higher . . .
December 31, 2019 | Junior subordinated capital securities continued to attract buyers this month as the equity market rallied and US Treasury bond yields edged modestly higher . . .
November 30, 2019 | The bond market ended largely unchanged, but volatile on the heels of the 3rd rate cut this year and equities continued to reach new highs . . .
October 31, 2019 | The bond market continued its rally on the heels of last month’s rate cut and some weaker economic data, but then retreated as global risks appeared to be shifting to the upside. The Fed again delivered on its 3rd insurance cut . . .
September 30, 2019 | The bond market corrected swiftly to start the month only to steadily retrace much of its decline during the Fed meeting week which delivered another well anticipated 25bps rate cut . . .
August 31, 2019 | The bond market zoomed higher in August, following the Fed’s “insurance cut” and President Trump’s higher tariff penalties on China. Yields on US Treasury bonds collapsed for one of the biggest drops (or biggest UST bond rallies) since the European sovereign debt crisis 8yrs ago . . .
July 31, 2019 | The bond market consolidated in July trading off after the 4th of July holiday into a modest downtrend and then went sideways for the rest of the month in anticipation of the Fed meeting at month end. Despite an upward shift on the front end of the US Treasury yield curve, the “stubborn” inversion still prevails in the belly of the curve . . .
June 30, 2019 | The bond market continued its very firm move to lower yields aided by a significant downward shift of the US Treasury yield curve, but a “stubborn” inversion on the front end still prevails. The rates move extended the trend to lower yields all month long and (after last month’s rally) has now matched one of its longest rallies . . .
May 31, 2019 | There was a significant change in market tone during May as US Treasury bonds rallied and equity markets plunged. The primary impetus for the abrupt mood change was the FOMC minutes and rising trade tensions. The US Treasury bond rallied all month long and finished May quite over-bought . . .
April 30, 2019 | There was very little change in the tone of markets over the course of April. The March FOMC Minutes were released early in the March and confirmed that the Fed will be data dependent and patient in making another move (either way) . . .
