Skip to content

Inside The Bond Market

Dec 07 2018

The Fed Should Pause And It Will

  • Dec 7, 2018

Liquidity reduction (QT) by global central banks is already showing up in slower M1 growth in all G3 countries. Slower M1 growth has led economic slowdown by about twelve months.

Dec 07 2018

Bond Yield Proxy—A Tool For Equity Investors

  • Dec 7, 2018

We created an equity basket that can track the movement of the U.S. 10-year yield. Overall, it does a good job of capturing the major moves.

Dec 07 2018

Risk Aversion Index: New “Lower Risk” Signal

  • Dec 7, 2018

Despite the recent signal whipsaws, we have been cautious toward all risky assets and we continue to recommend defense amid higher volatility across all asset classes.

Dec 07 2018

US Bonds

  • Dec 7, 2018

Despite the recent signal whipsaws, we have been cautious toward all risky assets and we continue to recommend defense amid higher volatility across all asset classes.

Nov 07 2018

Divergence Everywhere—A Cross-Asset View

  • Nov 7, 2018

The 40 bps jump in the 10-year yield, a 2-standard-deviation event, occurred within a five-week win-dow. Interestingly, historical data doesn’t suggest a continued increase in the near term.

Nov 07 2018

Risk Aversion Index: New “Higher Risk” Signal

  • Nov 7, 2018

We have been leaning toward the defensive side despite the recent signal whipsaws and we continue to recommend caution in light of the increase in volatility across all asset classes.

Nov 07 2018

US Bonds

  • Nov 7, 2018

A significant rise in real yields would make us turn cautious toward all spread products.

Oct 05 2018

Mid-Term Elections—History Might Not Be A Good Guide

  • Oct 5, 2018

While mid-term elections are rarely big market movers, this year’s election demands more attention as it has the potential to alter the balance of political power in Washington.

Oct 05 2018

U.S. Rates—Driven Higher By Real Yields

  • Oct 5, 2018

The recent move higher in rates had broader support as other major markets also saw higher rates.

Oct 05 2018

Risk Aversion Index: New “Lower Risk” Signal

  • Oct 5, 2018

Our Risk Aversion Index fell sharply last month and triggered a new “Lower Risk” signal. Caution is still strongly recommended, and we favor higher-quality credit within fixed income.

Oct 05 2018

US Bonds

  • Oct 5, 2018

Attractive relative valuation outweighs concerns about heavy issuance and moderate deterioration in underwriting standards.

Sep 07 2018

EM Crisis? Not There Yet

  • Sep 7, 2018

What some EM countries are going through is a classic sequence that can potentially lead to a full-blown EM crisis.

Sep 07 2018

Yield Curve Proxy—A Tool For Equity Investors

  • Sep 7, 2018

The increasingly greater attention given to the yield curve by equity investors has prompted us to come up with an equity basket that can track the movement of the yield curve. Overall, it does a reasonably good job of capturing the major moves.

Sep 07 2018

Risk Aversion Index: New “Higher Risk” Signal

  • Sep 7, 2018

Our Risk Aversion Index reversed higher last month and triggered a new “Higher Risk” signal. We recommend a defensive stance within fixed income.

Sep 07 2018

US Bonds

  • Sep 7, 2018

Both interest rates and investment grade spreads are at a reasonably attractive level to provide downside cushion.

Aug 06 2018

Risk Barbell Or Middle Of The Road?

  • Aug 6, 2018

The underperformance of investment grade credit this year prompted the question of whether a risk-barbell portfolio of safe Treasuries and risky high-yield bonds may offer better performance than a middle-of-the-road portfolio of 100% investment grade corporate bonds in a highly-uncertain environment.

Aug 06 2018

2018 Time Cycle—Mid-Year Update

  • Aug 6, 2018

2018 has been very atypical so far. But if the historical pattern is any guide, a near-term pull back should be expected in most equity markets, followed by nice year-end rallies.

Aug 06 2018

Risk Aversion Index: A New “Lower Risk” Signal

  • Aug 6, 2018

Our Risk Aversion Index fell enough last month to generate a new “Lower Risk” signal. This is certainly not a “no brainer” risk-on signal. We recommend higher quality spread products within fixed income.

Aug 06 2018

US Bonds

  • Aug 6, 2018

While we believe overall volatility is likely to stay high, both interest rates and investment grade spreads are at reasonably attractive levels to provide a downside cushion.

Jul 07 2018

Investment Grade Widened More Than High Yield: Implications & More

  • Jul 7, 2018

As credit spreads widened, something rather unusual happened: investment grade Corporate bonds performed far worse than High Yield bonds.

Jul 07 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Jul 7, 2018

We believe the negative impact of central bank liquidity reduction is here to stay for the foreseeable future. We recommend defense within fixed income.

Jul 07 2018

US Bonds

  • Jul 7, 2018

Political risks linger and the M&A picture remains active.

Jun 07 2018

All Crowded Trades Are Vulnerable—Even The Yield-Curve Flattener

  • Jun 7, 2018

Bond market volatility picked up quite a bit in May but the higher-low/higher-high pattern in the 10-year yield is still intact, indicating the primary uptrend has not reversed.

Jun 07 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Jun 7, 2018

Volatility among non-equity asset classes has gone up noticeably while the VIX dipped lower. We still expect volatility to stay high and continue to play defense within fixed income.

Jun 07 2018

US Bonds

  • Jun 7, 2018

Political and geo-political concerns linger while we are entering a seasonally unfavorable window. Maintain Neutral.

May 05 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • May 5, 2018

We expect volatility to stay high and still recommend defensive positions within fixed income.

May 05 2018

Rates & Credit At A Major Crossroads—A Few Things To Watch

  • May 5, 2018

 April saw a valiant attempt by the U.S. 10-year yield to crack the upper band of the multi-decade downtrend channel (around 3.0%-3.05%).

May 05 2018

US Bonds

  • May 5, 2018

Volatility has stayed high as political and geo-political concerns linger while the central bank liquidity reduction is underway. 

Apr 06 2018

Trade War & Libor—More Bark Than Bite?

  • Apr 6, 2018

Isn’t a trade war more bark than bite? We think a full-blown trade war may be eventually negotiated away but the process is not necessarily painless to investors.

Apr 06 2018

U.S. Investment Grade Corporate Bonds: Maintain Neutral

  • Apr 6, 2018

Our overall view toward credit has turned decidedly cautious over the last couple months and that includes our long-term favorite.

Apr 06 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Apr 6, 2018

While concerns about a trade war might be easing and the credit market has been largely unaffected by the surge in Libor rates, we have to recognize the fact that Trump’s policy focus has become increasingly market-unfriendly while global central banks are in a liquidity-reducing mode.

Mar 07 2018

U.S. Rates: Looking For A Dip

  • Mar 7, 2018

The U.S. 10-year ended the month 15 bps higher but non-U.S. bonds fared much better with bond yields in Europe and Japan 4-5 bps lower.

Mar 07 2018

More On The Dollar Bear Market

  • Mar 7, 2018

A potential trade war (not quite there yet) is not good for the dollar as it will inevitably invite retaliation and sour sentiment toward dollar assets.

Mar 07 2018

Risk Aversion Index: A New “Higher Risk” Signal

  • Mar 7, 2018

While the late rebound in risky assets pared back earlier losses, weakness was observed in all major risk asset classes. We continue to recommend defense for the time being.

Mar 07 2018

US Bonds

  • Mar 7, 2018

Higher volatility when credit spreads are already thin makes even the higher-quality issuers less immune to credit sell-offs. We tactically reduced these bonds to Neutral.

Feb 06 2018

Anatomy Of A Dollar Bear Market

  • Feb 6, 2018

With the dollar index breaking below the 2017 low, we believe the dollar bull market that started in 2011 (based on the trade-weighted dollar index) is most likely over.

Feb 06 2018

Risk Aversion Index: Turned Higher But Stayed On The “Lower Risk” Signal

  • Feb 6, 2018

Our Risk Aversion Index turned higher last month but stayed on the “Lower Risk” signal as of the end of January. The first few days of February brought a big surge in this index and would suggest a “Higher Risk” stance for the near term.

Feb 06 2018

US Bonds

  • Feb 6, 2018

The net impact of the tax reform is significantly positive to investment grade companies as the interest deductibility change has very little impact.

Jan 06 2018

Four Divergences—A Steepening Correction

  • Jan 6, 2018

While we still believe flattening is the more likely scenario over the medium term, we do feel the recent flattening move is a bit overdone and there are several divergences that suggest a short-term steepening correction is in store.

Jan 06 2018

2018 Time Cycle—Beware A Fall Correction

  • Jan 6, 2018

The most common 2018 time-cycle pattern among major markets is a fall correction, with the U.S. and Japan faring better than their European counterparts.