Category: Bonds

Duration giveth, and duration taketh away. For much of the past 35 years, while interest rates were in a secular decline, duration (a measure of a bond’s sensitivity to changes in interest rates) was the best friend of bond investors. In 2018, it has become their worst enemy. At one end of the spectrum, you […]

  • Posted in Bonds, Markets
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Interest rates are on the rise, at their highest levels in over 4 years. What is that telling us, if anything, about growth and inflation? Let’s take a look… While you often hear commentators suggesting there is a strong relationship between bond yields and the real economy, the evidence seems to be lacking. Since 1930, […]

  • Posted in Bonds, Economy, Inflation
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With the yield curve hitting its flattest level of the expansion last week, many are wondering what impact that will have on the stock market. Data Sources for all tables herein: NBER, FRED, Bloomberg. Using monthly data. The yield curve is a leading indicator of the economy, but the stock market is one as well. […]

  • Posted in Bonds, Equities
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Inverted Yield Curves and Recessions

Any way you look at it, the US yield curve is flattening: The spread between 30-year and 10-year yields has moved down to 0.18%, the narrowest since July 2007. The spread between 10-year and 5-year yields has moved down to 0.14%, also the narrowest since July 2007. The spread between 10-year and 2-year yields has […]

When Cash Is King

Cash is king. At least for the moment. Data Source: S&P Dow Jones Indices. In the first quarter of 2018, short-term Treasury bills finished higher while both the S&P 500 and 10-Year Treasury bond declined. The greatest fear among many investors is that this trend will continue. Is this a rational fear? How often has […]

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