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Tag Archives: TIPS

Weekly Market Pulse: Inflation Scare?

Bonds sold off again last week with the yield on the 10 year Treasury closing over 1.6% for the first time since early June. The yield is now down just 16 basis points from the high of 1.76% set on March 30. But this rise in rates is at least a little different than the fall that preceded it. When nominal rates fell from April through July, real rates fell right along with them. The nominal bond yield fell by 63 basis points and the 10 year TIPS yield fell by 57. That means that the drop was...

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Weekly Market Pulse: Zooming Out

How often do you check your brokerage account? There is a famous economics paper from 1997, written by some of the giants in behavioral finance (Thaler, Kahnemann, Tversky & Schwartz), that tested what is known as myopic loss aversion. What they found was that investors who check their performance less frequently are more willing to take risk and experience higher returns. Investors who check their results frequently take less risk and perform worse. And that makes a lot of sense if you...

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Talking To Bill About Evergrande

The US Treasury auctioned off $45 billion in 3-month (13w) bills this morning. Despite the Federal Reserve paying 5 bps for SOMA UST collateralized, for “some” reason the primary market’s players wanted this issue far more. The auction’s high was just 3.5 bps, its median 2.5. These are down from 4 bps and 3.5 bps, respectively, last Monday. With the world on edge over China’s Evergrande, it has more than a few people talking about prospects for dreaded contagion. The generic honorific...

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CPI Comes ‘Home’ To The Other Side of Inverted TIPS

January 2021 was, it may have seemed, only the start of something big. Huge. Colossal. Coronavirus vaccines had been discovered, publicized, and rolled out, meaning for the first time a real shot at ending the pandemic. The world could quickly get back to normal, the economy recovering its footing, and between January and that bright future Uncle Sam was going to flood not just the US but much of the rest of the world (starting with US imports) with Treasury’s cash.Everything appeared to be...

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The Fed’s True Love: He Tapers Me, He Tapers Me Not

They were doing so well, or at least not quite as bad as throughout the prior several decades. Through this year’s 5% CPI’s, Federal Reserve policymakers stuck to their gut not their heart. Transitory factors. Right call (as we’ll see in a minute). That won’t be their mistake. On the contrary, these Economists (central bankers are all Economists nowadays, and the few who aren’t have only worked for them) continue to fall head over heels in love with the unemployment rate. Despite missing so...

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Weekly Market Pulse: What Is Today’s New Normal?

Remember “The New Normal”? Back in 2009, Bill Gross, the old bond king before Gundlach came along, penned a market commentary called “On the Course to a New Normal” which he said would be: “a period of time in which economies grow very slowly as opposed to growing like weeds, the way children do; in which profits are relatively static; in which the government plays a significant role in terms of deficits and reregulation and control of the economy; in which the...

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Weekly Market Pulse: Trading Places

They’re out there panicking right now. I can feel it. They’re out there. They’re panicking. Look at them. – Eddie Murphy as Billy Ray Valentine in Trading Places I thought of that scene the other day when a good friend in the investment business told me that investors today are panicking into the market rather than out as they were last spring. I have to say, I find it hard to disagree with him but I think there are specific parts of the market where panic is more...

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Golden Collateral Checking

Searching for clues or even small collateral indications, you can’t leave out the gold market. We’ve been on the lookout for scarcity primarily via the T-bill market, and that’s a good place to start, yet looking back to last March the relationship between bills and bullion was uniquely strong. It’s therefore a persuasive pattern if or when it turns up again. To recap the main push of last year’s acute dollar shortage: Over the past several dreadful weeks of liquidations the pattern has...

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TIPS and Commodities Led Returns For Asset Classes Last Week

Inflation-indexed Treasuries and commodities were the top performers last week for the major asset classes, based on set of exchange traded funds. The iShares TIPS Bond ETF (TIP) rallied for a fourth straight week, gaining 0.8% over the five trading days through Friday, July 16. The gain lifted the fund to a record high. A close runner-up last week: broadly defined commodities. WisdomTree Continuous Commodity Index Fund (GCC), an equal-weighted portfolio, rose 0.6%. The...

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Weekly Market Pulse: As Clear As Mud

Is there anyone left out there who doesn’t know the rate of economic growth is slowing? The 10-year Treasury yield has fallen 45 basis points since peaking in mid-March. 10-year TIPS yields have fallen by the same amount and now reside below -1% again. Copper prices peaked a little later (early May), fell 16% at the recent low, and are still down nearly 12% from the highs. Crude oil has recently joined in, falling 7% from its recent high. Energy stocks are in a full-blown correction,...

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