Yield Curve
Highlights Chart 12017 Bond Returns
2017 Bond Returns…
Watching The Warning Signals Recommended Allocation
Monthly Portfolio Update…
Highlights Higher Treasury Yields: As core inflation returns to the Fed's target in 2018 the 10-year TIPS breakeven inflation rate will rise by at least 50 basis points and the nominal 10-year Treasury yield will move above 2.80%. This is substantially higher than the 1-year forward rate of 2.49…
Highlights Risk assets continue to rise despite a flattening yield curve. Individual investors are more sanguine than institutional investors as stocks make new highs. The S&P 500 is testing the top of a key channel. Will it break out or break down? Bond market sentiment, positioning and…
Highlights The recent price action in the credit markets is disconcerting; it challenges BCA's bullish view and raises the odds of an equity market correction in the near term. Credit spreads would need to widen significantly more to signal that a recession is imminent. What asset classes…
Highlights Question 1: Why is U.S. inflation still so low? Question 2: How important is the upcoming change in Fed leadership? Question 3: What are the implications of the U.S. tax cuts? Question 4: What is the outlook for the ECB next year, and how will this impact the U.S. dollar versus…
Highlights Chart 1Fed Must Fall Behind The Curve
Fed Must Fall Behind The Curve…
Highlights Global "Low-flation" Vs. Oil Reflation: Investors who believe that inflation is dead will be surprised by the breakout of global oil prices in 2018 toward the mid-$60 level anticipated by our commodity strategists. This will help drag both realized and expected inflation higher…
Highlights Yield Curve & TIPS: To avoid policy failure the Fed must allow inflation to reach its 2% target before the onset of the next recession. This means it will soon fall behind the inflation curve. Treasury curve steepeners and TIPS breakeven wideners will benefit. Inflation: The…
Highlights Oil Breakout: Bond markets have been slow to discount the impact of higher oil prices on global inflation, which should lead to steeper yield curves and additional increases in inflation expectations. Trump Trade: The proposed U.S. tax cut plan will result in wider budget deficits…