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kelvinjay By James Smith, Chris Turner & Michiel Tukker Three scenarios for Thursday’s Bank of England meeting ING Markets aren’t fully buying the BoE’s new-found optimism Can the Bank of England diverge from the Federal Reserve on rate cuts? Bank officials – including Governor Andrew Bailey – have been not-so-subtly hinting that it can. We…
Douglas Rissing/iStock via Getty Images Thesis In A Nutshell The S&P 500 (SP500) has tumbled over the past few weeks, as hotter-than-expected inflation readings pushed up speculation for a potential rate hike in 2024. However, the FOMC meeting for April/May gave investors some relief, as Fed Chair Jerome Powell indicated that a rate hike is…
yalcinsonat1 By James Knightley | Padhraic Garvey, CFA | Chris Turner Fed keeps rates at 5.25-5.50% As universally expected, the Federal Reserve has left the Fed funds target rate range at 5.25-5.50%. The decision was unanimous and was made pretty easy, given inflation continues to run too hot for comfort, consumers are still spending strongly,…
Richard Drury Two weeks ago, Fed Chair Jerome Powell let it be known that he had no confidence to cut rates with the present data, and last week’s inflation releases surely did not give him any reassurance that the inflation outlook was moving in the right direction. Numerous inflation reports keep surprising to the upside,…
Vernon Wiley/DigitalVision via Getty Images As explained in Prof. Robert Jarrow’s book, cited below, forward rates contain a risk premium above and beyond the market’s expectations for the 3-month forward rate. We document the size of that risk premium in this graph, which shows the zero-coupon yield curve implied by current Treasury prices compared with…
PM Images Overview In an environment of higher interest rates, I believe that Business Development Companies are the right place to be! BDCs are a great way to offset the higher rates with a higher level of dividend income, since they direct profit from debt investments. Higher rates translate to higher interest you can collect…
RichHobson Stocks bounced yesterday after a three-week decline in anticipation of earnings reports from more than one-third of the companies in the S&P 500 this week. The highest hopes are for the largest technology companies benefitting from the boom in artificial intelligence, but I am more interested in profits beyond the Magnificent 7, which are…
Richard Drury/DigitalVision via Getty Images Thesis The iShares Floating Rate Bond ETF (BATS:FLOT) is a short term bond fund which we have covered before here, where we were highlighting the reasons for which the name was a strong hold candidate for an investor’s spare cash. The vehicle has continued to deliver since we last visited…
undefined Introduction As Dynagas LNG Partners (NYSE:DLNG) hasn’t paid a dividend on its common shares since 2019, I have been focusing on the preferred shares. One of the two series of preferred shares recently moved from a fixed rate to a floating rate preferred dividend. As the preferred dividends remain very well-covered and as the…
Richard Drury By James Knightley Ongoing strength means a June rate cut looks unlikely The US economy continues to show remarkable resilience in the face of high borrowing costs, tight credit conditions and a weak external backdrop. It appears on course to grow at a 2.5% annualised rate in the first quarter. We already know…
MCCAIG Stubbornly strong economic data has led to significant shifts in market expectations for when, and how quickly, the Federal Reserve will begin cutting policy rates. Our own forecast is now for the first rate reduction to come in September, but the complications of starting an easing cycle just before the U.S. Presidential election does…
Jonathan Kitchen/DigitalVision via Getty Images Overview The latest CPI report released, and the overall sentiment leads to a lower chance of interest rate cuts. The original probability of interest rate cuts before the March CPI report was around the 56% mark but has now dropped to an 18.5% chance of rate cuts by the end…
Marc Dufresne The Bank of Canada kept its key policy rate on hold at 5%. The central bank says it’s starting to see the economic conditions needed to lower rates, but that it’s looking for more evidence the momentum can be sustained. Hafiz Noordin, VP & Director, Active Fixed Income Portfolio Management, TD Asset Management,…
Douglas Rissing Thesis On April 10 the March 2024 CPI data was released, numbers which came in higher than expected, triggering a red day in equities and a massive rally in bond yields. Sticky inflation has been a problem for the Fed, who might be forced down the line to make 3% the new long…
Eoneren By James Knightley, Chief International Economist US inflation remains too hot for comfort US core consumer price inflation came in at 0.4% month-on-month, above the 0.3% consensus – only one forecaster predicted such an outcome, so just like last Friday’s jobs report, this is another significant upside surprise that should quash expectations of a…
Richard Drury Overview Adding different streams of income sources to my portfolio made it a lot easier for me to ride out any type of market volatility throughout my years of investing. Not only did it make it easier to mentally overcome a dropping portfolio value, but it also helped me feel like I had…
yalcinsonat1 There is good reason to be disappointed with the Federal Reserve. It has gotten us into an awful economic mess as a result of its earlier ultra-easy monetary policy. That policy managed to create both an inflation and a financial stability problem. But the Fed has only one interest rate policy to address those…
RichHobson Earlier today, the Bureau of Labor Statistics released the March employment report which showed that the economy created 303,000 jobs in the month of March, well above consensus estimates. While the headline number isn’t everything when it comes to assessing the strength of the labor market and the overall economy, nothing in the March…
Douglas Rissing Despite a bumpy inflation road recently, Fed Chair Powell reiterated that the FOMC is likely to begin cutting rates sooner rather than later. What was particularly interesting about the March rate decision was that the committee raised both its inflation and growth forecasts, but generally kept its policy rate outlook unchanged. Longer-term, however,…
Lemon_tm The first week of April will be busy, with plenty of data to come, mainly on the jobs front, with some peeks into the inflation prism. The ISM purchasing managers indexes, ADP Jobs report, JOLTS report, and employment report will tell us a great deal about the state of the economy and, more importantly,…
RiverNorthPhotography Investment Thesis T. Rowe Price (NASDAQ:TROW) is a fundamentally solid asset manager with a long track record of outperforming relative benchmarks which has led to consistent growth in assets under management. Despite short-term challenges driven by rising interest rates which as led to net outflows over the past few years, I believe interest rate…
Nuthawut Somsuk And there were big upward revisions of the already hot readings for January. The core PCE price index, the inflation index that the Fed is focused on and refers to all the time, was revised up on Friday for January to an annualized month-to-month growth rate of 5.6% (up from the original 5.1%)…
pcess609/iStock via Getty Images The Bureau of Economic Analysis (BEA), has just released its estimate for February 2024 US Personal Consumption Expenditures (PCE). Also known as “Personal Spending,” PCE directly accounts for over 60% of total US Gross Domestic Product (GDP), marking it a crucial indicator for assessing changing rates of expansion, contraction, and momentum…
ZargonDesign/E+ via Getty Images What Rocket is – a mortgage banker, not a fintech Rocket describes itself as follows in its 2023 10-K: “We are a Detroit-based fintech company including mortgage, real estate, and personal finance business. We are committed to delivering industry-best client experiences through our AI-fueled homeownership strategy. Our full suite of products…
PM Images The Eaton Vance Floating-Rate Income Trust (NYSE:EFT) is a closed-end fund, or CEF, that income-hungry investors can employ in pursuit of their goals. As is the case with many leveraged loan funds, the Eaton Vance Floating-Rate Income Trust has a very attractive yield of 10.80% right now. Here is how that compares to…
Andrii Yalanskyi The U.S. Federal Reserve is signaling it still sees three rate cuts this year, despite recent hotter-than-expected inflation data. Scott Colbourne, Managing Director and Head of Active Fixed Income at TD Asset Management, looks at the outlook for rates and the implications for the bond market. Transcript Greg Bonnell – It’s been a…
Dilok Klaisataporn There are a lot of questions about Fed policy these days and where things might be headed. Here are some commonly asked questions I’ve been getting lately: 1) Why is the Fed considering a rate cut? At Wednesday’s FOMC meeting the Fed stood by their estimate of 3 rate cuts in 2024. This…
DINphotogallery Global shipping rates surged at the end of 2023. The Drewry World Container Index (WCI) jumped from under 1,500 to near 4,000 over just a handful of weeks. While there has been a pullback in the composite index of 6% to $3,287 per 40ft container this past week, the index increased by 82% when…
porcorex/iStock via Getty Images By Carsten Brzeski Today, we saw no policy action and all focus on communication from the European Central Bank. This had already been the focus of today’s meeting for a while. The just-published policy announcement shows that now is not the time for rate cuts and that – at least in…
Golden_Brown Originally Posted on March 6, 2024 The Bank of Canada held its key interest rate steady at 5%, saying more time is needed for higher rates to bring inflation back to target. Maria Solovieva, Economist at TD, discusses with MoneyTalk’s Greg Bonnell why a June rate cut is still likely. Transcript Greg Bonnell –…
Andrii Yalanskyi Fed Chair Jerome Powell is scheduled to testify in the House today (Wed., Mar. 6), and markets will be all ears on topics that offer guidance on the outlook for interest rate cuts. The current consensus anticipates that the central bank will begin easing policy at the June 12 FOMC meeting. The Fed…
William_Potter The Dimensional Core Fixed Income ETF (NYSEARCA:DFCF) is a great way to play the global investment-grade bond market. Benchmarked against the Bloomberg Agg, or Bloomberg U.S. Aggregate Bond Index, DFCF offers exposure to long-duration bonds and other fixed-income securities that, in the aggregate, are expected to maximize the total return for investors. While the…
peterschreiber.media Business Overview Consolidated Edison (NYSE:ED) is a utility company that distributes and delivers electricity, gas and steam energy in New York to about 4 million people. The company operates power plants, distribution centers, distribution routes and natural gas pipelines among other things in order to create and distribute energy. As with most regional utility…
RichHobson/E+ via Getty Images Introduction Count me as one of the people who also think interest rates will be cut sometime soon. When to be exact? No one knows, but I do think we’ll get one sometime this year. There’s also a chance we can get another increase before cuts as seen by the latest…
Lazy_Bear The US dollar and interest rates appear to be at an inflection point. Much of the past several weeks have been about correcting the overshoot that took place in Q4 23, when the derivatives markets were pricing in nearly seven quarter-point rate cuts by the Federal Reserve this year. US two- (US2Y) and 10-year…
Petrovich9 The U.S. Federal Reserve is widely expected to lower interest rates at either the May or June meeting. Daniel Ghali, Senior Commodity Strategist with TD Securities, tells MoneyTalk’s Greg Bonnell why he thinks many investors may be under-positioned in gold when interest rate cuts start. Greg Bonnell: While the US Federal Reserve has preached…
istetiana/Moment via Getty Images By Andrew Prochnow Recent developments suggest that those banking on a March rate cut by the Federal Reserve may need to recalibrate their expectations. The likelihood of a March rate cut diminished significantly in early February following the U.S. Labor Department’s announcement affirming robust hiring in the economy and the unyielding…
MCCAIG We needed consolidation for the major market averages after the parabolic move that took place during November and December of last year. Stocks were extended to the upside and extremely overbought, while bullish sentiment was equally stretched. I suggested then that the catalyst for selling would be increased uncertainty about the direction of monetary…
Wong Yu Liang/Moment via Getty Images The January CPI came in much hotter than expected. Does this mean the 2024 rate cuts are off the table? Does it mean inflation is about to flare up again? Let’s take a closer look at what’s happening here and where inflation (and interest rates) might be headed this…
Thai Noipho/iStock via Getty Images Co-authored by Treading Softly. When you hear the word catalyst, what comes to mind? For many, you may immediately think of your car and its catalytic converter. Good thinking! The catalytic converter contains a material to help finalize the conversion of emissions in your car’s exhaust system to less dangerous…
Andriy Onufriyenko/Moment via Getty Images By Michael J. Fleisher Since early 2022, the Federal Reserve (FED) lifted the federal funds rate by 5.25% to curb inflation, triggering speculation from pundits over the economic impact and future path of rate increases. Recently, the Fed noted that inflation has been tempered by restrictive monetary policy and signaled…
Nerthuz By James Knightley, Chief International Economist | Padhraic Garvey, CFA, Regional Head of Research, Americas | Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE Fed caution argues against a March rate cut No change from the Federal Reserve on interest rates (target range kept at 5.25-5.50%) and…
kutaytanir/E+ via Getty Images The Bank of Canada highlighted stubborn inflation as a key reason it kept interest rates hold, even as the economy showed signs of slowing. Andrew Kelvin, Head of Canadian & Global Rates Strategy with TD Securities, discusses the outlook for rates going forward with MoneyTalk’s Greg Bonnell. Greg Bonnell: The Bank…
Jamakosy The WisdomTree Floating Rate Treasury Fund (NYSEARCA:USFR) holds a portfolio of floating rate bonds which have zero duration and whose interest payments adjust to reflect changes in 3-month Treasury Bill yields. The USFR currently yields 5.6% according to the Wisdom Tree website, which is highly attractive relative to stocks and Treasury bonds. I expect…
SAUL LOEB/AFP via Getty Images After just over two years, the S&P 500 (SP500) has finally posted a new all-time high. A lot has happened over the period with the market climbing over major headwinds including the post-pandemic hangover, supply chain shortages, a short-lived energy crisis, the start of two wars, 40-year high inflation, and…
Rows of Solar Panels in Florida csfotoimages Emera Incorporated (OTCPK:EMRAF) (EMA.TO) (TSX:EMA:CA) is a Canadian-based electric utility often overlooked and misunderstood by utility sector investors. I have been a shareholder for almost 10 years and have followed the company since it started playing equity banker for sister Canadian utility Algonquin Power (AQN) in 2010. I…
ConceptCafe 10x Genomics (NASDAQ:TXG) specializes in medical devices, instruments and software for collecting and analyzing biodata. This is a growth company with impressive revenue growth but it’s been struggling to turn a profit due to heavy operating expenses (especially R&D and marketing) and its valuation is still a bit lofty despite a recent sell off….
shih-wei Markets appear to be taking a sober second look at when the U.S. Federal Reserve may be ready to start cutting interest rates, with March looking increasingly less likely. Scott Colbourne, Head of Active Fixed Income at TD Asset Management, discusses the factors keeping inflation sticky and what it means for monetary policy. Transcript…
Fidelity Digital suggests that 2024 might witness a resurgence of institutional interest in DeFi yields. In its recently released 2024 Digital Assets Look Ahead report, asset manager Fidelity Investments predicts a potential resurgence of institutional interest in Decentralized Finance (DeFi) and stablecoins, based on the Federal Reserve‘s anticipated interest rate cuts. Stablecoins and Institutional Adoption…