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The Aptus Blog

Market notes, charts, investment concepts, and timely market updates, directly from our investment team.

2022-10-31 · Bonds & RatesThoughts on Interest RatesWe’ve had a number of questions regarding peak interest rates. Interest rates have of course been a hot topic in 2022… the 4th worst year for government bonds since 1721 2022-10-24 · Bonds & Rates10-Year Treasuries Hit 15-Year HighTreasury yields are once again higher this morning with the 10-year Treasury hitting its highest yield in 15 years. It’s currently at 4.32% which matches yields last visi2022-10-13 · Bonds & RatesSeptember CPI … Another Hot OneAnother hot print with Core CPI hitting a new cycle high of 6.6% y/y, numbers summarized here: CPI m/m: +0.4% CPI y/y: +8.2% (vs +8.1% exp) Core m/m: +0.6% (vs +0.4% exp)2022-10-12 · Bonds & RatesInterest Is The Barometer of TrustI’ve been reading Edward Chancellors book The Price of Time over the last couple weeks. It’s a bit dense but found it thoroughly interesting and informative. Basically th2022-09-28 · Bonds & RatesPeak Inflation ≠ Peak YieldsAs interest rates continue their hockey stick move higher, we looked back to history for guidance on when we might see peak rates. We discovered a valuable nugget of info2022-09-14 · Bonds & RatesPrepare for More TighteningAnother Hot Inflation Report CPI came in above expectations yet again. In fact, headline inflation has only come in below expectations once in the past year. The U.S. CPI2022-09-02 · Bonds & RatesQuantitative Tightening is HereThe balance sheets of global central banks have grown drastically in the last 15 years. The United States balance sheet alone grew from ~$4 trillion to ~$9 trillion over 2022-08-31 · Bonds & RatesThey’re All Hawks Now!Stocks Fall on the “No Pivot” Powell Speech SPX down over -5% in the past 3 days since Jackson Hole. Additional Fedspeak: BARKIN: JOB MARKET STILL VERY TIGHT, DEMAND IS H2022-08-26 · Bonds & RatesNo Pivot in Jackson HolePowell focused on inflation and the willingness to tolerate “some pain to households and businesses” to bring inflationary pressures down. He also says that it will likel2022-08-24 · Bonds & RatesWhat to Expect From Jackson HoleThe Fed’s annual Jackson Hole Economic Policy Symposium takes place on Friday and will open with a speech by Chair Powell at 10am EST. We expect Powell to reiterate that 2022-08-17 · Bonds & RatesThe Fed May Not Be Your Friend For AwhileCPI Softer but Higher Unit Labor Costs (ULCs) Remain Problematic A sustained slowdown in inflation (the Fed’s clear goal) will require a sustained slowdown in economic ac2022-08-11 · Bonds & RatesPeak InflationU.S. Headline CPI was flat from June to July, slowing to 8.5% YoY. The core CPI (ex food & energy) rose +0.3%, keeping the YoY number at 5.9%. Headline CPI had the lo2022-08-04 · Bonds & RatesWho is Wrong About Rates?Another Sizable Hike The Fed raised its policy rate by 75 bps as expected, which according to Chairman Powell brings the Fed Funds target range back to “neutral”. Powell 2022-07-20 · Bonds & RatesCan the Fed Really Pivot?Another Month, Another (BIG) Hike. Next Wednesday, July 27th, the Fed is expected to hike 75bps and bring their overnight target up to the FOMC’s consensus neutral rate o2022-07-07 · Bonds & RatesCurve Inversions and Lots of MovementThe Yield Curve Inverted… Again The yield curve has inverted temporarily several times this year, but it’s only been for a day or two and then bounced back to a more norm2022-06-24 · Bonds & RatesA Busy Stretch for Bond Market ParticipantsFed Update Chairman Powell was before Congress this week and admitted several things: 1) rate hikes will not likely bring down cost of gas; 2) rate hikes will not likely 2022-06-14 · Bonds & RatesMay CPI Forcing the Fed’s HandPeak Inflation… Think Again! Source: Bianco Research. As of 6/10/22 CPI rose 1.0% MoM and 8.6% YoY (a new high) in May. The core CPI again surged 0.6% MoM and 6.0% YoY. I2022-05-26 · Bonds & RatesMunicipal Bonds Looking More AttractiveMunicipal 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 inte2022-05-20 · Bonds & RatesThe 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 defen2022-05-06 · Bonds & RatesDid 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 basica2022-04-29 · Bonds & RatesMortgage Bond (MBS) UpdateDecomposing 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 ov2022-04-25 · Bonds & RatesMuni UpdateThis bond bear market has taken down Munis hard. Yields on Munis (measured by MUB) are around 2.45%, which is ~3.5% tax-free on a 4.25yr duration. Higher Yield Muni funds2022-04-22 · Bonds & RatesBond Market Week Over Week Update* Why Are Yields Rising: Rising yields are a consequence of falling bond prices, which occurs when investors sell bonds. This is an obvious point, but it’s important to r2022-04-15 · Bonds & RatesIt’s All the Same, Only the Rates Have ChangedFlashing back a year, when bonds felt a bit more alive than dead. Originally posted in our Content Hub last March but the concepts remain important… Rates Are Moving Inte2022-04-08 · Bonds & RatesBond Market Week Over Week Update* Bonds… The Rough Stretch Continues: The Bloomberg US Aggregate Index continues the largest drawdown in its history. Since August 6th, 2020 – the end of the most recent 2022-03-29 · Bonds & RatesElephant in the Room: Yield Curve InversionThe spread between the 10-year Treasury and the 2-year Treasury has compressed materially over the first three months of 2022 (~80bps of tightening), and inverted yesterd2022-03-24 · Bonds & RatesBond Market Update March 24, 2022* Bonds… A Rough Stretch: The Bloomberg Global Aggregate Index, a benchmark for government and corporate debt, has fallen 11% from a high in early 2021. That’s the bigges2022-02-18 · Bonds & RatesBond Market Update Feb 17, 2022Current Rates & the Curve Macro influences like the Russia/ Ukraine news are likely temporary and the major influence over yields remains central bank tightening. Tha2022-02-10 · Bonds & RatesHigh Yield : Where Does It Go from Here?From a risk-premia perspective, equities and high yield both provide exposure to corporate earnings, albeit in a different manner. While equity is a purer exposure to cor2022-02-04 · Bonds & RatesWhy are TIPS down YTD if Inflation is such a concern?We’ve had questions on why Treasury Inflation Protected ETFs (TIPS) were down YTD while inflation isn’t really budging. We wanted to provide some color on the topic given2022-02-02 · Bonds & RatesFeb 2nd, 2022 – Bond Market Weekly Update* Current Rates & the Curve: The front end of the curve continues to feel pressure as economists are now projecting five to seven rate hikes in 2022, and the forwards2021-12-15 · Bonds & RatesWhat Returns Can Bonds Deliver?Investing Framework, How Are Returns Generated? The Aptus investing methodology revolves around a Yield + Growth +/- Multiple (Expansion/ Contraction) framework. The latt2021-03-08 · Bonds & RatesInflation Protection…Are TIPS the Answer?One question we’ve gotten a lot recently is how can investors position portfolios if we see some inflationary pressure… are Treasury Inflation-Protected Securities (TIPS)2021-02-24 · Bonds & RatesMuni to Treasury Ratio at Historic LevelsAs advisors often see, high-income investors love municipal bonds. And for the most part we’ve shared that love. Tax-favored income and low correlation to equities, what’2021-02-18 · Bonds & RatesConvertible Bonds: Feed the DucksConvertible Bonds experienced an incredible 2020 and start to 2021. The Bloomberg Convertible Index outperformed both the S&P 500 and Nasdaq indices in 2020. We can’t2020-11-30 · Bonds & RatesToday’s High Yield? Not Worth the RiskInvestors that took advantage of the blowout in credit spreads back in March have seen incredible gains from the bottom. The credit markets experienced a liquidity freeze2020-08-28 · Bonds & RatesChairman Powell Letting Loose in Jackson HoleAs we think about economics from a high level it is arguably one of the most interesting and misunderstood topics we face as investors and humans. It is truly the crossro2020-07-30 · Bonds & RatesHidden Risks in “Conservative” PortfoliosWe have the privilege to receive modeled portfolios from advisors all over. They vary in risk tolerance and philosophy although most have some degree of blending passive 2020-06-10 · Bonds & RatesCan the Fed Keep Mortgages Propped?Avoiding Agency Mortgage Allocations in our Models We’ve been saying since the middle of last year that the percentage of total returns in fixed income coming from price 2020-05-30 · Bonds & RatesWhat Bonds Do You Own?The mathematics of compounding: big losses are essentially ALL that matter to your rate of compounding, not the small losses—and not even the big or small gains. The big 2020-05-01 · Bonds & RatesThe Fed BazookaSource: Federal Reserve Bank of St. Louis, as of 04.30.2020 As many market participants predicted, the Fed would have limited effectiveness in using their monetary policy2020-04-29 · Bonds & RatesNavigating a Choppy Bond Market…Don’t Fight the FedAs we navigate through these very uncertain times, we’d like to take a deeper dive into different sectors of the fixed income and credit space. The fixed income markets a2020-03-03 · Bonds & RatesCredit: Priced to PerfectionThis is probably a little more granular than past posts, but I think it is important to use my background in fixed income trading/ credit analysis to roll back the curtai2020-02-14 · Bonds & RatesRobbery in the Bond MarketVenk Reddy has an article on Advisor Perspectives, Robbing 2020 to Pay 2019: A Reality Check for Fixed Income, and it needs to be read! We’ve been screaming about the iss
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