Highlights Chart 12017 Bond Returns  Treasuries sold off for the third consecutive month in November (Chart 1), and with Congress about to deliver tax cuts and core inflation showing signs of bottoming, the bond bear market is…

Highlights Chart 1Fed Must Fall Behind The Curve  Jerome Powell will assume the Fed Chairmanship at a critical juncture for monetary policy. Core PCE inflation is still well below the Fed's 2% target, and yet, the slope of…

Highlights Chart 1Tax Reform Is A Bear-Steepener  The federal government provided some details about its tax reform proposal last week. Markets reacted immediately, once again starting to price-in the possibility of lower tax…

Highlights Chart 1"Trump Trade" Progress Report  One of our seven investment themes for 2017, published in a Special Report last December, is that the combination of strong U.S. growth and accommodative Fed policy creates…

Highlights Chart 1Too Close For Comfort  The Fed is in the midst of tightening policy, but with inflation still below target it wants to ensure that overall policy settings remain accommodative. In the language of central…

Highlights Chart 1Too Pessimistic On Growth  Treasury yields bounced sharply last week and the yield curve steepened. As a result the Bloomberg Barclays Treasury index posted a negative return in June, only the second month of…

Highlights Fed Policy Loop: Low inflation is preventing rate hike expectations from being revised higher, prolonging the current rally in spread product. We expect rate hike expectations to move up as inflation recovers, eventually…

Highlights Chart 1Something's Got To Give  Last Friday's disappointing employment report reinforced the bond market's recent strength. The 10-year Treasury yield reached a new 2017 low of 2.15%, the 10-year TIPS breakeven…

Highlights Chart 1Rate Hikes Lagging Wage Growth  Last Friday's GDP report showed that the U.S. economy grew a meagre 0.7% (annualized) in the first quarter of 2017, well below levels necessary to sustain an uptrend in…

Highlights Chart 1Is Inflation Heating Up?  In past reports we have argued that as long as inflation (and inflation expectations) are below the Fed's target, then the "reflation trade" will remain in vogue. In other…