Rick is BlackRock’s Chief Investment Officer of Fundamental Fixed Income, Co-head of Americas Fixed Income and a member of the company’s Global Operating Committee. A 2013 inductee into the Fixed Income Analysts Society Hall of Fame, Rick also serves as a member of the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets. He writes about fixed income, the economy and government policy.
Disclosure: The content Market Realist publishes should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of BlackRock.
The American economy is facing major structural issues that have the potential to thwart economic progress. The most important hurdle facing the US economy is an aging population.
Both the labor force participation rate, which came in at 62.8%, and the employment-population ratio, which came in at 59.7%, were unchanged in August.
There has been much focus over the past week on the August payroll growth slowdown and what it means for the timing of the next Fed hike. Rick Rieder sees a more interesting trend…
In the past three decades, emerging market (EEM) economies grew rapidly, led by exports, which shifted current account balances from a deficit to a huge surplus.
Over the past six decades, the world economy has expanded at a rapid pace—the average global growth rate was 3.8% from 1950–2014. The post-recession global growth has faltered to an average growth of just around 3%.
The big theme of 2015 was the Chinese (FXI) (MCHI) economic transition from an investment- and manufacturing-led growth to a consumption- and services-driven economy.
For the last few years, the world has been in the midst of a major demographic transition, which has affected the world economy. The aging population is one of the most visible global trends
Liquidity hasn’t really deteriorated in some of the major segments of the bond market. Other direct liquidity measures suggest sufficient liquidity in the system.
The pace of recent job and wage growth indicates that the labor market remained weak despite a decline in the unemployment rate. The labor force participation rate has not increased substantially in recent years with the improvement in the economy.
Labor productivity is an important tool to measure the strength of a country’s economy. Policymakers often use this indicator to compare output efficiency during a particular period.
One of the most prominent effects of technology is on the asset side of the balance sheet. Many technologies drive companies to employ fewer assets in order to generate higher returns.
The mystery of waning labor productivity in various developed economies is still unsettled. However, various economic literature offers plausible explanations.
One of the big-picture shifts currently taking place is aging populations, especially in developed nations. Populations are rapidly aging in most developed countries.
Technology (XLK) is advancing by leaps and bounds. The diffusion and adoption rates for new technologies have risen over the years as the population has become more tech-savvy.
A rise in wage growth may not negate the effect of debtless consumption. Although lower oil prices were expected to be a tailwind for consumption, households used this windfall to service debt.
The ECI grew at 0.2% in 2Q15—the lowest quarterly growth in 33 years. Wage inflation is critical from an economic point of view, leading to higher disposable income and consumption.
While the CPI is a measure of inflation in consumer prices, the ECI gives an indication of whether employment costs are rising or falling by measuring inflation in wages.
Until recently, lower oil (USO) prices and a robust job market didn’t lead to greater consumer spending. Instead, the American consumer ramped up their savings and serviced their debts.
An aging population is likely to keep global economic growth muted in the years to come. This is primarily because the dynamics of the population are rapidly changing.
San Francisco Fed president John Williams noted that the Fed’s ability to hold off a liftoff in rates is “more limited” than its ability to tighten. A rate hike could be expected in September if the economy continues to grow in the next two months.
The core Consumer Price Index, excluding food and energy prices, shows some firming in inflationary conditions. The Core CPI has ticked upward for the last three straight months.
Solid employment growth seems to point to the improving health of the US economy. The US markets cheered the April jobs market report on Friday, May 8, 2015.
Select areas of the EM debt sector hold good potential, as many of these countries exhibit low leverage levels and are currently funded through year-end.
Given all of the noise in the fixed income market over the last week, however, you may be wondering what my interpretation of this latest report means for your bond portfolio.
Maintaining monetary policy accommodation at “emergency levels” appears both unnecessary and potentially disruptive to the proper functioning of financial markets today.
Given all the fixed income headlines over the last week, you may be wondering what the latest jobs report means for your bond portfolio. Rick Rieder shares three investing implications of the September employment numbers.
While munis are no longer cheap on an absolute basis, they remain relatively attractive, especially long-end muni bonds. Plus, the sector looks compelling given improving issuer credit conditions and higher tax revenues.
The 10-year Treasury yield’s recent move has high yield bonds looking more attractive on a relative basis. Earlier in the year, high yield levels sat at 5% vs. 2.5% for the 10-year Treasury.
A number of market watchers attributed Wednesday’s 10-year Treasury yield move to fears about a global economic slowdown, heightened geopolitical unrest, growing worry over the Ebola health risk and uncertainty about Fed policy.
Like quantitative easing before it, the Fed’s zero interest rate policy may actually be inhibiting economic growth and job creation in unintended ways. Rick Rieder explains.
While Fed officials believe real gross domestic product (or GDP) will come in lower than expected in 2014 and 2015, the FOMC members acknowledged that the unemployment rate is likely to decline more rapidly than anticipated.
Back in March, Chair Yellen, perhaps mistakenly, said that a “considerable time” was six months. Then, at her September press conference, she said “a considerable time” isn’t mechanical.
More importantly than whether the Fed’s recent policy statement was “dovish” or “hawkish,” the statement provided five signs that a Fed rate hike is likely to come earlier than many expect, writes Rick Rieder.
Rates at the “belly” of the yield curve will rise more dramatically than long-term rates: This might seem counter intuitive since shorter-term rates are generally less sensitive to rising rates (lower duration = lower rate sensitivity)…
With interest rates volatile and market conditions changing, these are tricky times for bond markets. Rick Rieder outlines three ways markets are evolving, and suggests that staying flexible will be critical.
