Some important items to take away from this week:
The Greek 170bln bailout package was finalized.
The Fed assessed the economy as improving and instituted no new monetary programs and will continue to reinvest principal and roll over expiring treasuries at auction. Fed Press Release
Commercial and Industrial loan growth is robust and the latest round of bank stress test was seen as a positive.
Prices continue to moderate.
The Greek bail out drastically lowers any likelihood of a short term black swan banking event. The Fed indicated no new programs to manipulate interest rates, this indicates long term rates may have bottomed. The bond market sold off this week, we were small sellers of longer dated bonds as well.
Long dated bonds were down over 5% on the week. We have been through an extreme recession and the Fed has intervened heavily in the bond market over the past 3 years and pushed yields below inflation. The expectation is that markets slowly normalize, the Fed slowly exits interventionist policies and real yields exit negative territory.
We were small sellers of our longest duration bond position this week. We do believe the economy is stable but we do not observe it as robust and are watching for signs of acceleration.
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For information on Alhambra Investment Partners’ money management services and global portfolio approach to capital preservation, Douglas R. Terry, CFA is reachable at dterry@4kb.d43.myftpupload.com
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