Last week was yet another lesson in trade fading. Threats of US tariff increases on $200b of Chinese goods, along with a proposed 20% tariff on car imports from Europe, caused the markets to wobble for a few hours. Then of course the perfunctory fading began. I’m not...
I would characterize todays’s FOMC announcement as essentially meeting slightly hawkish expectations. Here is what we learned: No changes to estimates of the NAIRU or r-star. There were some very small tweaks to the path by which we get to equilibrium though. And with...
Will they lower their estimate of the NAIRU? Will they raise their estimate of r-star? Will they drop the following two lines from the statement: “The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run”...
Last week the unemployment rate hit a cycle low of 3.8%, a level that was last seen in April 2000, at the very end of the Goldilocks era. Prior to that you would have to go all the way back to the “golden age” of the late 1960s in order to find rates this low....
I have only written a couple times on Europe over the last 18 months. Once in the lead-up to the Dutch election and again in the lead-up to the French election. The titles of those notes were “Trump, the great unifier of Europe” and “Trump, the great unifier of...
Those folks in the 4 hikes in 2018/4 hikes in 2019 camp are probably not too happy after reading the May FOMC minutes. Here are a couple of excerpts that probably stung a little: “… some participants noted it might soon be appropriate to revise the forward-guidance...
“With all the crazy monetary experimentation over the last 10 years, how in the world did we not generate excessive amounts of inflation? Surely negative short-term real rates for so long, with a 5x increase in the Fed balance sheet, should have taken us back to...
Taking a step back from day-to-day market minutia, the rather mundane story for 2018 is that spoos and the dollar are largely unchanged while 10yr Treasury yields are up about 50bps. That said, the paths to unchanged for spoos and dollar have been quite different. At...
With just about four months of 2018 under our belts, spoos are down about 1.5% while 10-year Treasuries are up about 60bps in yield. If you had not been watching the daily price action since January, you might think the VIX would be sub-10 and the MOVE would be north...
With just about four months of 2018 under our belts, spoos are down about 1.5% while 10-year Treasuries are up about 60bps in yield. If you had not been watching the daily price action since January, you might think the VIX would be sub-10 and the MOVE would be north of 80. But it ain’t […]
