The Role of Bonds in an Inflationary World

For decades, investors have treated bonds as a cornerstone of portfolio diversification, largely based on their performance during the late 20th century. From the early 2000s and through the 2010s, the often-negative correlation between stocks and bonds provided a...

Transitory Disinflation

US inflation topped forecasts for a third straight month.  Both the Core and the Headline consumer price index increased 0.4% from February.   Source: Stifel as of 04.10.2024   March CPI: Headline: +0.4% (Exp: +0.3%) Core: +0.4% (Exp: +0.3%) YoY: Headline:...

Lot of Moving Parts in the Bond Market

Treasury Issuance Back at Pandemic Levels   As we’ve noted over the last year, the current level of US fiscal deficits, given a strong economy and low unemployment, is uncharted territory.  It was ironic that Phillip Swagel, director of the Congressional Budget...

March 2024 FOMC: Dovish Tone

The FOMC voted unanimously to leave their benchmark rate unchanged in the target range of 5.25%-5.5%.   Source: Bloomberg as of 03.20.2024   The big surprise was the willingness of the Fed to maintain their projection for 3 rate cuts in 2024 even on the back...

March CPI: Inflation Still Sticky

Inflation Stabilizing Above 3%   The U.S. CPI rose +0.4% m/m (3.2% y/y) & core (ex-food & energy) was +0.4% m/m (3.8% y/y) in February. The so-called “supercore” gauge slowed to 0.47% on the month, down from a red-hot 0.85% in January. The data is...

Competing Forces in the Bond Market

Productivity is the Way Out Productivity plays a crucial role in influencing both inflation and economic growth. A key to stopping a second wave of inflation is likely productivity (output per hour) picking up. Instead of having too much money chasing too few goods we...