Yield Signs
Yield Signs
An episode of Bloomberg Surveillance alights upon the concern of the moment in finance and economics. That is the Yield Curve Signal or Signals.
Tom Keane’s guest was Joachim Fels, Pimco Global Economic Advisor. Keane sets it up as a discussion of Bond yield curve and pending (droll emphasis there) recession. Fels says Yeild curve inversion signal both predicts AND causes recessions. But when remains the quandary. The inversion has to last 3 months, to be a signal, he reminds.
If you ask what would seem to be different now, Fels doesn’t say low unemployment (relatively for some) (see below) – he instead says this time the inversion is accompanied by chronic low interest rates. EMPHASIS.
A backdrop, he holds, is that the quality of Investment grade corporate bonds (EMPHASIS) has deteriorated.
Also guesting was Derek Halpenny MUFG European Head of Global Markets Research who looks at central bank activity, specifically buying of Currency of the Euros persuasion. You’d be suspect, of course, because he gauged the Euro’s 2019 outlook as finishing at $1.20 (what’s it now? 79 cents, or something?) and has only adjusted that down to $1.16.
But Mr. Halpenny makes a reasonable assertion when he says asset pricing if for doom and gloom outside the US – that may be overdone.
If any of this resonated for you you’d bet that the Euro’s future isnt as bad as the consensus holds. And that you would underweight corporate credit. You would, as we saw from November to January, and sometimes hear again, set yourself on the defensive.
Barron’s takes a different view on the meditation – There’s no expiration date on this bull market doesn’t say the party will never end, it just visualizes an economy that kicks the can down the street.
The mood at present is not unfamiliar, and it is full of the usual grist for behavioralists. “People are superstitious because the bull market has been running so long says Peter Anderson of Andersen Capital Management.
The last few years now look like a straight line up, but there has always been reason to sell and always a reward for holding.
This leads to the conclusion that the Yield Inversion should not have too much read into it. The economy is not sending out signals to reinforce dire straights, at least ones that are discerned in these items. The job market is still improving, with people re-entering the rock market, and Inflation as these folks measure it is not a notable pressure.
“We are all used to using the word cycle, we’re all used to looking at historical charts and graphs and equations and relationships’’ says Dubravko Kakos-Bujas, [no foo] JP Morgan chief US equity strategist. But he continues the word cycle may not be apt given unconventional central bank involvement.
If this resonated for you you might run out and buy Equities. But when the underlying logic is ‘nothing can be predicted/nothing makes sense’ you might slacken your running pace.
Occurring behind this are rumblings that the index train may have run out. What would Jack Bogle say?
https://itunes.apple.com/us/podcast/bloomberg-surveillance/id296237493?mt=2&i=1000434141556
https://www.barrons.com/articles/this-bull-market-has-no-expiration-date-51554510445
An episode of Bloomberg Surveillance alights upon the concern of the moment in finance and economics. That is the Yield Curve Signal or Signals.
Tom Keane’s guest was Joachim Fels, Pimco Global Economic Advisor. Keane sets it up as a discussion of Bond yield curve and pending (droll emphasis there) recession. Fels says Yeild curve inversion signal both predicts AND causes recessions. But when remains the quandary. The inversion has to last 3 months, to be a signal, he reminds.
If you ask what would seem to be different now, Fels doesn’t say low unemployment (relatively for some) (see below) – he instead says this time the inversion is accompanied by chronic low interest rates. EMPHASIS.
A backdrop, he holds, is that the quality of Investment grade corporate bonds (EMPHASIS) has deteriorated.
Also guesting was Derek Halpenny MUFG European Head of Global Markets Research who looks at central bank activity, specifically buying of Currency of the Euros persuasion. You’d be suspect, of course, because he gauged the Euro’s 2019 outlook as finishing at $1.20 (what’s it now? 79 cents, or something?) and has only adjusted that down to $1.16.
But Mr. Halpenny makes a reasonable assertion when he says asset pricing if for doom and gloom outside the US – that may be overdone.
If any of this resonated for you you’d bet that the Euro’s future isnt as bad as the consensus holds. And that you would underweight corporate credit. You would, as we saw from November to January, and sometimes hear again, set yourself on the defensive.
Barron’s takes a different view on the meditation – There’s no expiration date on this bull market doesn’t say the party will never end, it just visualizes an economy that kicks the can down the street.
The mood at present is not unfamiliar, and it is full of the usual grist for behavioralists. “People are superstitious because the bull market has been running so long says Peter Anderson of Andersen Capital Management.
This leads to the conclusion that the Yield Inversion should not have too much read into it. The economy is not sending out signals to reinforce dire straights, at least ones that are discerned in these items. The job market is still improving, with people re-entering the rock market, and Inflation as these folks measure it is not a notable pressure.
| | thing 1 | | |%/day | | | 3mo | | |1y | | |# | |
| S+P 500 | +0.46% | +16% | +10% | 2892 |
| FTSE | -O.61% | -- | 3.4% | 7446 |
“We are all used to using the word cycle, we’re all used to looking at historical charts and graphs and equations and relationships’’ says Dubravko Kakos-Bujas, [no foo] JP Morgan chief US equity strategist. But he continues the word cycle may not be apt given unconventional central bank involvement.
If this resonated for you you might run out and buy Equities. But when the underlying logic is ‘nothing can be predicted/nothing makes sense’ you might slacken your running pace.
| Line 1 Col 1 | Line 1 Col 2 | Line 1 Col 3 |
| Line 2 Col 1 | Line 2 Col 3 | Line 2 Col 3 |
| Line 3 Col 1 | Line 3 Col 2 | Line 3 Col 5 |
Occurring behind this are rumblings that the index train may have run out. What would Jack Bogle say?
https://itunes.apple.com/us/podcast/bloomberg-surveillance/id296237493?mt=2&i=1000434141556
https://www.barrons.com/articles/this-bull-market-has-no-expiration-date-
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