Bond Yields
Yields Up, Economy Down?
Based on past experience, steepening in the curve from deeply inverted levels, as it has done recently, means a recession should be fairly close at hand. Worse, the fact that this move is of the “bear-steepening” variety should further depress economic prospects over the next 12-18 months.
Banks: Happy Anniversary!
This year marks the 25th anniversary of a slew of major bank mergers: Wells Fargo/Norwest, Banc One/First Chicago, NationsBank/BankAmerica, Star Bank/Firstar, First Union/CoreStates Financial, and SunTrust/Crestar Financial. Who knew the KBW Bank Index would celebrate the occasion by returning to its price level of that same era?!
Bond Yields - More Room on the Downside
We have seen the high in bond yields this year and expect a volatile grind lower in rates over the summer: Bearish Treasury positions remain significant, the Copper/Gold ratio fell sharply, and the Citi Economic Surprise Index implies more downside.
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