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Fed Minutes: ‘Fairly Soon’


With Federal Reserve Chair Janet Yellen on Capitol Hill for two days of testimony last week, plus Vice Chairman Stanley Fischer’s interview on Bloomberg TV, plus the upside surprise on U.S. CPI inflation data released on 15 February, the minutes released today from the Federal Open Market Committee (FOMC) meeting of 31 January – 1… Read More ›

The Pace of Trump’s Policy Agenda: Three Big ‘Ifs’

It’s hard to believe that U.S. President Donald Trump has only been in office for a month, given the dizzying activity in Washington. Yet our observations from before the inauguration seem to be holding true, at least so far: Governing is indeed harder than campaigning. This is especially the case when it comes to the… Read More ›

Encroaching Risks to Capital Preservation

Positive economic data continue apace in the U.S., from firming employment to renewed consumer spending. The latest news on inflation confirms the trend: The Consumer Price Index (CPI) showed inflation running at 2.5% year-over-year. The data do not even tell the whole story: Also in play are the Trump administration’s growth-oriented fiscal stimulus and tax… Read More ›

Russia: Stagnant Stability

A recent trip to Moscow on the 100th anniversary of the 1917 revolution revealed not a whiff of revolutionary change in the economy, but rather stagnant growth mixed with structural stability. We could simply call it “stagnant stability.” Despite the hit to real incomes, the country weathered the 2014–2015 double shock of collapsing oil prices… Read More ›

Looking Beyond the CPI Jump

Today’s U.S. Consumer Price Index (CPI) numbers were notably firm, confirming that weakness in the fourth quarter of 2016 was the result of residual seasonality in core goods prices rather than a more worrisome decline in the underlying trend pace of inflation. With today’s print, the annualized core rate of inflation in the three months… Read More ›

French Election Jitters Underscore Caution When Investing in Europe

Market nerves in anticipation of the French presidential elections in April and May 2017 have driven a spike in 10-year French and Italian government bond spreads, which have climbed 30 to 40 basis points (bps) in recent weeks (to 75 bps and 195 bps over bunds, respectively). Fueling investors’ unease was a series of surprises on… Read More ›

Australia’s All-Weather Banks

Does air quality in Beijing have anything to do with the property market in Australia? The answer is probably yes. Life in Australia, with its promises of clean air, abundant sunshine, quality education and universal healthcare, has attracted people from around the world. This demographic trend has had profound effects on the country’s housing market… Read More ›

More Senior Than What? Potential Risks in Senior Bank Loans

Floating rate bank loans, which are typically the most senior debt in an issuer’s capital structure, have traditionally been considered more resilient than high yield bonds in the event of default. However, recent shifts in the bank loan market may challenge this historical norm. When a company defaults, position in the capital structure is critical,… Read More ›

A New Phase in the Cold Currency War

One of the most interesting and, for many observers, surprising market developments year-to-date has been the gradual descent of the broad trade-weighted U.S. dollar from the lofty 14-year highs reached late last year. Is this just a temporary lapse in a general dollar bull market, as most forecasters and market participants appear to believe, or… Read More ›

The Bank of England: How to Justify Doing Nothing

Ahead of Thursday’s quarterly Inflation Report, the Bank of England’s Monetary Policy Committee (MPC) faced a relatively tricky challenge. How can it justify doing nothing ­– holding interest rates steady and offering no strong view on the direction of monetary policy – while also increasing its growth forecasts, at a time when it already expects… Read More ›