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Developed Countries

Heed The Warning From The Steepening Yield Curve?
The US Treasury yield curve appears to be sending a warning about the economy. The 2-year/10-year yield curve – which had been flattening for the past two years and inverted in mid-2022 – has steepened since the recent banking tumult. The spread between the…
Daily Insights
Near-Term Headwinds For IT Stocks
Information Technology has been among the best performing S&P 500 equity sectors during the recent bout of bank stress – second only to Communication Services. Since March 8, the IT sector has rallied by 3% and is now nearly back to its 2021 peak relative…
Daily Insights
Bond Vol Will Stay Relatively Elevated
US corporate bonds have seen some meaningful spread widening over the past few weeks.  The Bloomberg US investment grade index spread rose from the recent low of 120bps on March 6 to 147bps yesterday, at one point climbing as high as 163bps on March…
Daily Insights
Why Rate Cuts Are Bad News

It is a big mistake to think that rate cuts or lower bond yields will ease credit conditions. Quite the contrary. After an aggressive tightening of monetary policy, the first rate cuts always coincide with much tighter credit conditions. We discuss the implications for credit, government bonds and equities. Plus, we find a startling anomaly in equity sector performance.

Counterpoint by Dhaval Joshi
US Consumer Morale Firms
The US Conference Board’s Consumer Confidence Index unexpectedly edged up from 103.4 to 104.2 in March, surprising expectations of a decline to 101. The Expectations component’s 2.6 point increase offset the Current Situation index’s 1.9 point decline. …
Daily Insights
Monetary Policy’s “Long And Variable” Lags
Results from the March Conference Board Consumer Survey reveal that although the difference between the share of respondents indicating that jobs are ‘plentiful’ and those saying jobs are ‘hard to get’ edged down in March, it nevertheless remains extremely…
Daily Insights
Heed The Optimistic Signal From Sweden’s PMI?
The Swedish PMI’s new orders-to-inventories ratio is sending a positive signal about the outlook for the global manufacturing cycle. The indicator has been recovering over the past two months, indicating that the rise in new orders is outpacing that of…
Daily Insights
Commercial Real Estate: No Need To Panic Just Yet
Investors are scrutinizing US equity sectors as they try to discern new areas of stress and vulnerability. The commercial real estate market is next in line in the "wall of worry." It is particularly concerning that small- and mid-sized banks, vulnerable to…
Daily Insights
QE Or Not QE?
BCA Research’s US Bond Strategy service concludes that the Fed’s use of its balance sheet to provide reserves to distressed banks means that interest rates will be higher than in an alternative scenario where the Fed didn’t deploy its balance sheet in that…
Daily Insights
Stay The Course, Despite The Bank Headlines

The recent uncertainty regarding the health of the banking systems in the US and Europe is not having any material impact on overall financial conditions or economic sentiment. The aggressive rate cut expectations, especially in the US, are unlikely to be realized. Although the macro growth and policy backdrop remains unfriendly for corporate debt on both sides of the Atlantic.

Global Fixed Income Strategy

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