2022 has not started off smoothly in financial markets. Many factors have combined to produce volatility across all asset classes. The surge in inflation, driven by supply chain issues and the reopening of the economy, sent bonds into a selloff. Bond prices move in the opposite direction from yields, so bond interest rates have been...Read More

If you don’t like volatility – in politics, the economy, or life in general – 2020 is not the year for you. Surprisingly, though, recent volatility in the stock market has been decreasing. Volatility is generally measured by the VIX index, which uses real-time S&P 500 index bid/ask quotes. As you might imagine, the VIX...Read More

In a world where the ten year Treasury note yields 0.6% it is hard to remember the time of decent fixed income yields.  Who would have thought we’d look back at the previous decade of low interest rates and think “those were the good old days.” Turns out, yield is as hard to come by...Read More

According to my last two letters, it seems I’ve managed to be both right and wrong at the same time. In early February, as the coronavirus was starting to make itself globally significant, I mentioned that it might just be the sort of “major disruption” that could set the U.S. economy on a downhill slide...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

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