Gov Sovereigns/Treasurys

The recent bear-steepening of the US Treasury curve has been driven by the combination of stronger-than-expected economic growth and stable Fed rate expectations. Historically, such periods do not last very long, and we see the current bear-steepening episode ending soon. We also highlight an opportunity in Agency MBS.

US monetary policy is restrictive, as evidenced by a falling jobs-workers gap. The reason that unemployment has not risen is because labor demand still exceeds supply. That will change in the second half of 2024 when the US economy succumbs to recession. Investors should increasingly favor bonds over stocks.

Comments on recent Fedspeak, bond market moves and this morning’s CPI report.

An update to our US bond strategy following this morning’s employment report.

There is a connection between the bond market meltdown and Republican Party’s meltdown. Investors should expect more short-term financial market volatility as a result of the triple whammy of high bond yields, high oil prices, and a strong dollar.

We present our Portfolio Allocation Summary for October 2023.

Aggressive monetary tightening has always led to recession, although the timing is uncertain. The effects of high interest rates are starting to be felt. Investors should stay risk off and buy government bonds as a safe haven investment with carry.

Introducing our Special Series to assess where Portugal, Italy, Greece, and Spain stand today. Stay tuned for more.

In this Strategy Outlook, we present the major investment themes and views we see playing out for the rest of 2023 and beyond.

A discussion of today’s FOMC meeting and its investment implications.