Yield Curve
Highlights Dear Clients, The holiday season is upon us, a time that is always filled with traditions. This week, we are starting a tradition of our own with this new "year-ahead" outlook report, focusing on the big ideas and themes that we expect will drive global bond market performance next…
Highlights Global Duration: Global bond yields, pushed higher since July on the back of improving global growth and rising inflation, have now overshot to the upside on excessive expectations of U.S. fiscal stimulus. Take profits on bearish bond positions and increase portfolio duration…
Highlights Chart 1More Upside From Inflation
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Highlights Portfolio Strategy The rise in Treasury yields is approaching a threshold that has often caused equity market indigestion. Stay focused on current monetary conditions rather than fiscal unknowns. The bear market in lodging stocks has played itself out: take profits on an…
Highlights Treasury Yields: The uptrend in Treasury yields has run into extreme technical resistance and is likely to abate during the next few weeks. Beyond that, a cyclical sweet spot of improving growth and accommodative monetary policy will open up during the first half of 2017 that will…
Highlights Trump's Win: The Republican sweep of both the White House and Congress in the U.S. elections will allow President-elect Donald Trump to implement much of his planned policies, including a major fiscal stimulus package. Trump Stimulus & The Yield Curve: Trump's proposed…
Highlights Duration: We continue to advocate a below benchmark duration stance, but the bond bear market is likely to take a pause once market rate expectations have fully converged with the Fed's forecasts. TIPS: The Fed will be reluctant to offset any inflationary fiscal impulse until TIPS…
Highlights Chart 1Targeting 2%
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Highlights Global Duration: The current mix of rising government bond yields, bear-steepening yield curves and rising inflation expectations is not surprising, given reduced political uncertainty and greater perceived tolerance of higher inflation by central banks. Maintain a below-benchmark…
Highlights Muni Credit Cycle: The reading from our Municipal Health Monitor supports low Muni/Treasury yield ratios for now, but will become less supportive near the end of 2017. This is consistent with historical lags between the muni and corporate credit cycles. Issuance: State & local…