Municipal Bonds Looking More Attractive

Municipal bonds have been thrown out with the bathwater since the beginning of the year as the Fed gets serious about taming inflation and in turn the market pushing interest rates higher. The decline in price (and increase in yield) could make the current landscape...

The Fed Getting Squeezed

*  Fed Expected to Hike 50bps at Next Two Meetings. As you can see below, the odds on both are at 100%. Given the persistence of inflation, the Fed has been put into defensive mode (i.e., forcefully tightening policy) even into a growth slowdown. Source: Bianco...

The Affordability Problem in Housing

Strong demand for housing may give some flashbacks to 2007/2008, but this is not necessarily a bubble. We believe the work-from-home has shifted the demand fundamentals of real estate. New millennial home buyers are facing the highest interest rates in their adult...

Did the Fed Ease Policy?

May 5th, 2022 – Bond Market Week Over Week Update   *  Fed Hikes 50bps and Starts QT, albeit more Slowly than Expected. The Fed hiked rates 50 bps (instead of 75) and basically ruled out 75 bps increases going forward. In our opinion, the Fed eased policy...

Mortgage Bond (MBS) Update

Decomposing Bond Yields Let’s first think about the components of a bond’s yield. At the simplest level, Treasury yields are simply the average expected Fed funds rate over the maturity plus a term premium. A good portion of the recent move in rates has been a direct...