Bond Yields Rising: Don’t Be Confused

Remarkably, even though the US Federal Reserve has lowered the Fed funds rate by 100bp since last September, US bond yields have risen sharply (roughly 100bp). Market commentators have offered a wide range of explanations for this unusual development. As the incoming Administration has signalled a significant shift in economic strategy, investors will need to [...]

Strategy 2025: Pivoting from Trump 2.0 Trades?

In my Strategy 2024 blog entitled "Powell Pivot: What Could Go Wrong or Right?", I suggested global financial markets had entered a cyclical sweet spot. Specifically, the combination of steady (if uneven) global growth, declining inflation, and easing monetary conditions pointed to higher equity market valuations. Indeed, even my bullish S&P 500 projection of 5,800 [...]

Global Government Debt: Balloon Still Expanding

11 June 2024 Government efforts to mitigate the economic consequences of the Global Financial Crisis (GFC) and the Covid pandemic have led to surging government debt. In the United States, for instance, public sector liabilities are approaching levels not seen before in peacetime (Chart above). And, while I will discuss important differences between countries and [...]

Powell Pivot: What Could Go Wrong or Right?

14 January 2024 On December 13, just weeks after warning it was premature to think the Federal Reserve would begin lowering interest rates, the US central bank gave the green light to at least three cuts in 2024. To be sure, consistent communication has never been a strong point of Chairman Jerome Powell's premiership. Nonetheless, [...]