Woe to the unemployment rate. Without it so much confusion and angst might have been avoided, though admittedly that more realistic view would have been itself darker but at least clear. In August 2014, Federal Reserve Vice Chairman Stanley Fischer unleashed a brief but powerful storm of realism upon the bubble of monetary policy. Perhaps it was because his target [...]
Economic Reports Scorecard The economic data of the last fortnight was typical for this cycle with some reports showing improvement and others the opposite; "mixed" has been the most often used adjective of this expansion. Of course, some reports are more important than others and the bad news was concentrated in an area that has consistently supported the economic bull [...]
Economic Reports Scorecard The US economy continues to trend, as the Fed finally noticed in its most recent dot plot, at a low rate of growth. The Fed downgraded their long term growth outlook to 1.8% and that's just a rounding error from the 2% we've been tracking for quite a while now. The fluctuations around that number have basically [...]
Last April, former Fed Chairman Ben Bernanke wrote a series of blog posts for Brookings that was intended to explain one of the biggest contradictions of his legacy. If quantitative easing had actually worked as he to this day suggests that it did, why wasn’t the bond market in clear agreement? In order to try to reconcile the huge discrepancy, [...]
Though I highly doubt he will admit it, he’s just not the type, even Ben Bernanke knows on some level that bond market is decidedly against him, or at least his legacy. Economists have a funny way of looking at bonds, decomposing interest rates into Fisherian strata. To monetary policy, interest rates break down into three parts: expected inflation over [...]
I've put off this update as long as I can now, waiting for some clarity, a change in our indicators that might suggest a change to the portfolio. Alas, despite a Fed meeting, a BOJ meeting and a plethora of economic data nothing has moved sufficiently to warrant a change. The risk budget is unchanged this month as is the [...]
As noted earlier today, the bond market is not truly a mystery or middle. In very simple terms that even Alan Greenspan might be able to understand, rising inflation and economic opportunity are reflected in higher interest rates and a steeper yield curve; full stop. The bond market, however, does not possess a crystal ball and thus must rely on [...]
Alan Greenspan is confused - again. The man who admitted to the world a decade ago he didn’t know much if anything about interest rates is now trying to change that reputation by suggesting yet again interest rates are set to rise. In testimony before Congress in February 2005, the then-Chairman of the Federal Reserve actually said: For the moment, [...]
The yield on the 10-year US Treasury closed at around 1.68% today, but judging by the haughty commentary surrounding global bond markets you would be forgiven if you thought it was 2.68%. Since the low in July around 1.37%, that +30 bps apparently seems like it to many people. Going back to the end of QE2, the idea that rates [...]
Economic Reports Scorecard The topic of the Fed's annual Jackson Hole retreat this year was "Designing resilient monetary policy frameworks for the future". That the gathered group of eminent economists had failed so spectacularly at designing a resilient monetary policy framework in the past did not deter the assembled learned group from pontificating about their presumed future accomplishments. Not that [...]
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