Many recent articles cite the never-ending stock rally and low jobless rate as indicators of economic health.  But can stock markets really be used as a reliable indicator of, well… anything? Once upon a time, the stock market may have been thoroughly intertwined with economic conditions.  These days, however, stock prices are as likely to...Read More

With good economic news prevailing and comments from several Federal Reserve governors, bets for a rate hike at the next Federal Reserve Open Market Committee meeting have nearly tripled since Tuesday morning.  Currently, the market is close to 90% sure that there will be a 0.25 percent rate increase in mid-March. Indeed, there are fewer...Read More

The Federal Reserve Open Market Committee (FOMC) is unlikely to change short term interest rates as they wrap up their first meeting of 2017 on Wednesday.  While many economic indicators continue to strengthen, markets have already reacted, or over-reacted, to the idea of an improving economy. The so-called “Trump Trade” that began immediately following the Presidential...Read More

In an article titled “U.S. Government Bonds Slump as Yellen Remarks Spark Interest Rate Anxiety” on the Wall Street Journal today (Link), the author details the Treasury market’s reaction to Fed Chairman Janet Yellen saying interest rates could be raised “a few times a year” for the next several years.  In short, the bond market...Read More

Beware the fickle emotions of financial markets.  If commonly used terms like “taper tantrum” and “Trump trade” aren’t clear enough, consider this – for most of the last decade, the stock market reacted poorly when good economic news was reported.  Like a child who didn’t want to lose their bicycle training wheels, markets were hoping...Read More

Over the last several weeks we’ve seen an uptick in interest rates, particularly in the benchmark ten year Treasury note.  While yields are up (which means prices are down), they are still far from being considered high.  In fact, we are still nearly fifty basis points under where we started 2016.  Even with rates below...Read More

The Federal Open Market Committee (FOMC), which sets the Federal Funds target rate, spent most of the last six months telling anyone who would listen that rates were going up, and that the U.S. economy was improving.  The market was reluctant to listen.  After all, the Fed threatened to raise rates for nearly two years...Read More

With ten year Treasury yields now well below two percent, the chances of another Federal Reserve rate hike in March are fading away.  In fact, it seems the Fed is as likely to move rates back down as to move them up – Janet Yellen recently said the possibility of negative rates is not off...Read More

2016 is off to quite a start.  We mentioned last quarter that the situation in China had potential to impact the economy in the United States, and this week is evidence of that.  While the turmoil in the stock market doesn’t directly represent the state of the larger economy, it does indicate the sentiment of...Read More

The economy, and investors, too, are in a sort of holding pattern currently.  Nobody is ready to make a move (not even the Fed), because it’s unclear what’s coming next.  The data is no help.  One day we will hear that the U.K.’s inflation rates have dropped below zero, the next that consumer sentiment in...Read More