Several of the largest and most prestigious fixed income firms—DoubleLine Capital, TCW and PIMCO—are either avoiding or shorting the 30-year Treasury, wary of the unending growth of the federal deficit. The firms instead are buying the shortest maturities. As widely noted, Warren Buffet is the largest holder of short, dated Treasuries, defined as less than … Read more
Thirty days ago, equities were suggesting doom and despair. Today the inverse as the S & P 500 has recaptured its April tariff induced decline as the S & P 500 had its best May since 1990. Treasuries, however, fell in price, their first monthly drop this year. The dollar declined for the fifth consecutive … Read more
Short dated Treasuries rallied after a “solid” $44 billion seven year note auction. The market is now again suggesting interest rates will be cut twice by year’s end. The volatility in expectations is great and these expectations could radically change yet again following the interpretation of next week’s top tier data. The S & P … Read more
Where to? Some will state that uncertainty is at levels never seen before. Perhaps a more accurate statement that today’s uncertainty is the result of changes in the global trading system, a catalyst that has not been experienced in over 90 years. During 1997, 2008, and 2020 similar statements were made that uncertainty was never … Read more
There are few that would debate that today is not different than yesterday. Trade and tariffs are at the top of the list. For approximately 80 years trade was a cost-effective foreign policy strategy, that was much cheaper than waging war, which in many cases was waged anyway. Immediately after WWII, the US resurrected former … Read more
Is the proverbial sandpile near a tipping point? Worries about the ballooning deficit and the political anathema to tackle fiscal recklessness as it is akin to political suicide, impacted yesterday’s $16 billion 20-year Treasury auction. Demand was regarded as “lackluster” sending yields the 20- and 30-year Treasury over 5%. The benchmark 30-year is now yielding … Read more
Longer dated Treasuries sold off yesterday, perhaps partially the result of the rout in Japanese bonds as that country experienced its weakest auction demand for its debt since 2012. Concern is rising that demand for government debt globally is failing to keep up with supply. The country’s 20-year bond is now at its highest yield … Read more
Market response to the downgrade of the Treasury was muted, perhaps the result of the initial downgrade occurred over 10 years ago, and Moody’s was only catching up with the other two major rating agencies. The downgrade however is a stark reminder of the fiscal issues of the country. Many market luminaries including Waren Buffet, … Read more
For all the worries about tariffs causing pain for consumers, shoppers have so far been mostly shielded from—or shrugged off—higher prices. Businesses have absorbed much of the cost from the new levies as they took effect last month, thus suggesting profit margins are shrinking. This week Target and Home Depot are to report quarterly earnings. … Read more
Prices paid to producers unexpectedly declined in April by the most in five years, largely reflecting a slump in margins, suggesting companies are absorbing most of the hit from higher tariffs. The 0.5% decline in the PPI followed no change in March. The median forecast called for a 0.2% gain. Excluding food and energy, the … Read more
