Equities and Yield Regimes

Mar 11, 2021 | US Equities

We look at the performance of equities and intermarket relationships across different real yield and inflation breakeven regimes. Today, real yields are starting to drive changes in nominal yields, which is supportive for equity gains In a recent report for clients,...

Sustained Eurozone Bond Sell-off Would Raise Chance of Yield Curve Control

Mar 5, 2021 | European Economy

Rising bond yields and tightening financial conditions pose a risk to the economic recovery and, in the euro-area, could increase the probability of the ECB formally adopting YCC The recent sharp sell-off and bear steepening in global sovereign debt markets has stoked...

Fed Efforts to Stem Rises in Yields Back on the Table in 2021

Feb 4, 2021 | US Economy

Rising yields – driven by increasing inflation expectations after the Democrats’ unexpected clean sweep – are a risk for equities. If yields keep rising then the Fed will be forced to intervene to keep longer-term yields lower At the end of last year we...

Steeper and Cheaper

Nov 5, 2020 | US Economy

While further gains will be harder from here, indicators continue to point to a supportive backdrop for yields and the yield curve, with the latter historically tending to steepen through US elections In our October monthly report (The Case for Banks – October...

Asia EM is the Likely Eventual Winner from Oil and Yield Plunge

Mar 12, 2020 | Emerging Markets

Global recession risks have risen but if recessionary feedback loops fail to materialise, the stimulative effect of lower yields and lower oil prices should eventually give rise to selective V-shaped recoveries. Our Stimulus Index aggregates the standardised changes...

Financial Balkanisation of the Eurozone

Aug 13, 2017 | European Economy

Convergence in core-periphery sovereign credit spreads since 2012 would seem to vindicate the raft of monetary easing measures deployed by the ECB to stabilise the eurozone. This is only half the story, and the other half is decidedly negative. The eurozone collapse...

Economic Surprise Indices to Fall Due to Rising Oil and Yields

Jan 20, 2017 | Uncategorized, US Economy

S&P 500 returns are positively correlated to the Citigroup Economic Surprise Index.   The Surprise Index leads the S&P 500 by about two months, as you can see from the chart on the left.  Normally, low levels in the index are a good time to buy.  When the...

Real Yields Wildly Mispriced Given Stagflation Light

Oct 7, 2016 | US Economy

The US now has the worst combination of outcomes, poor growth and rising inflation.  Bond yields are now the most negative they have been in almost forty years.  Only in the 1970s during stagflationary episodes were real yields this negative.    We don’t see a high...