FICC

While the bearish bond trade currently has a lot of momentum, we continue to think that Treasury yields are close to a cyclical peak and will be lower on a 6-12 month horizon.

Special Report

In this special report, we discuss whether the economic conditions necessary for a stronger yen (and higher JGB yields) will materialize over the next 12-to-18 months.

High-Yield municipal bonds have performed well in recent years, but valuations are now stretched. We recommend an underweight allocation, though we prefer high-yield munis over high-yield corporate bonds.

Some thoughts on this morning’s inflation number and implications for Treasury yields and TIPS.

Time is running out on the Bank of England’s tightening cycle. UK economic growth is flirting with recession, unemployment is rising, house prices are contracting and inflation is decelerating. Markets are overestimating the eventual bottom in UK inflation, and thus are also underestimating how much the Bank of England will eventually cut rates in the next easing cycle, which could begin as soon as H1/2024. The backdrop is turning increasingly positive for Gilts on a medium-term basis, while the overbought pound is due for a breather.

Our Portfolio Allocation Summary for August 2023.

Some thoughts on this week’s bear-steepening of the Treasury curve and this morning’s employment report.

A look at recent US data on economic growth and inflation, with an update on the implications for monetary policy and bond yields.

A brief recap of the July FOMC meeting and its investment implications.

This week we preview the July FOMC meeting, provide an update on the Fed’s balance sheet and recommend a new TIPS trade.