iShares TIPS Bond
Plosser on the use of Taylor-like rules in systematic guidance
In this part, we will discuss Dr. Plosser’s views on the use of systematic tools, for example, Taylor-like rules for setting policy rates and communicating these to markets.
Macro Events That Could Influence Markets This Week
The last three trading sessions in May are likely to be influenced by geopolitical issues rather than economic data.
4 must-know facts about rising inflation and your portfolio
Recent readings have shown that inflation has stabilized, which is a good thing, but signs of an imminent acceleration in inflation are still scant.
Inflation Is on the Horizon despite Low Headline Figures
TIPS give investors a hedge against inflation, like gold and other commodities. This protection, however, comes at the cost of lower coupons.
Your Update on the FOMC July Meeting
In its July meeting, the Federal Open Market Committee decided to maintain its target range for the federal funds rate at 1%–1.25%, in line with the market’s expectations.
Why Threats to Bond Markets Are Here to Stay
The real threat from rising rates is for bond markets.
A Sign That the Jobs Market Could Tighten More
According to the April JOLTS report, there were 6.7 million job openings at the end of April compared to 6.6 million in March.
Why Unemployment Worries Have Reduced
Job additions, which had scared policymakers and market participants alike with the downward revision for April and dismal additions in May, seem firmly back on track.
Will FOMC Keep Tightening Screws on the US Economy?
FOMC members after the latest policy statement have remained biased toward further rate hikes, but markets have questioned the Fed’s hawkishness.
What Does Inflation’s Retreat Mean for Gold?
Inflation hedge Investors tend to hold gold in their portfolios as insurance against inflation. When inflation is high, the value of paper currency, in terms of the goods and services it can buy, falls. As investors want something that doesn’t lose its value, gold usually has a direct relationship with inflation. Demand for gold increases as inflation […]
Why Isn’t the Fed Worried about the Unemployment Rate?
Some FOMC participants thought that the unemployment rate was close to or below what they assessed to be the long-term normal rate.
US Inflation Softens, Gold Still Has Drivers to the Upside
As per the U.S. Bureau of Labor Statistics, the US Consumer Price Index (or CPI) rose 0.2% in February, compared to a 0.5% rise in January 2018.
Why Changing Gears to Focus on TIPS Could Be Rewarding
The market may be too complacent about inflation expectations at the moment. If this is true, this makes TIPS attractive at the moment.
What worries Charles Evans?
A slowing global economy is also a worrying factor for Charles Evans. Companies with an export focus will hire fewer people if there are fewer orders.
Why Equity Markets Continue to Remain Unaffected by the FOMC
The US equity markets (SPY) haven’t seen any major impacts from the Fed’s policies in the recent past.
What Should Fixed Income Investors Do in Present Times?
What should fixed income investors do today? Generally, widening spreads provide a buying opportunity for investors, because spreads widen when yield of a security rises.
Recommendation: Keep municipal bonds in mind
While no longer cheap per se after their extraordinary run in 2014, municipal bonds continue to look attractive versus both Treasuries and corporate bonds.
How Investors Could Position in the Late Cycle of Expansion
After a prolonged calm period, a sell-off in equities (SPY) (QQQ) in October and again in November has shaken the markets out of their slumber.
How to Ballast Your Portfolio with Bonds
Municipal bonds (or munis) were the best performers in 2015 with returns of 3.2%. Meanwhile, investment-grade corporate bonds (LQD), long-dated Treasuries (TLT), and high-yield bonds (HYG) all gave negative returns in 2015.
A head-to-head comparison: What are ETFs and ETNs?
ETFs and ETNs are very similar—both trade on an exchange like a stock, follow an underlying product, and are easily accessible to investors.
Why you should invest in some of the 1,500 ETFs in the US
In this series, we’ll introduce you to the concept of exchange-traded funds (or ETFs). You’ll find out about the types of ETFs and how they can help your portfolio.
Was the Fed’s March 2016 Policy Statement Really Ultra-Dovish?
According to the March 2015 policy statement, policymakers now forecast only up to two rate hikes this year. This translates to a total rate hike of 50 basis points.
Is the US Economy Ready for Another Rate Hike?
With the US economy gearing itself up for the another rate hike, investors are investing in short-term Treasury securities whose price will fall less in value when interest rates rise.
Understanding the Fed’s yield curve can impact your bond returns
The yield curve is a graph that plots interest rates at different maturities with the same credit quality that can range from a month to 30 years or more.
Indicators Point to Firming in Inflationary Conditions
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.
Gundlach Isn’t Convinced with the Fed’s Rate Hike Outlook
Gundlach expected the Fed to go from two expected hikes in 2019 to 0.5 hikes. However, the Fed surprised him by projecting no hikes this year.
Will November Jobs Report Give Fed the Green Light to Hike Rates?
Fed policymakers are watching the job data closely, as it gives them insight as to whether the US economy is strong enough to withstand interest rates hikes.
Stay flexible: Why you need a dynamic bond portfolio
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.
PCE Inflation Expected to Remain Low for Now, but on Path to 2%
The July 2016 meeting minutes showed that policymakers expect PCE inflation to remain low in the short term, primarily because of the lingering effect of the fall in crude oil prices.
Asset class analysis: Measuring up TIPS as an inflation hedge
I’m not that enthusiastic about this asset class because TIPS are currently not cheap. In fact, in this environment the real return on a TIP, i.e. how much money an investor gets back after inflation – is actually negative.
Must-read advice for investors considering TIPS
From TIPS to “phantom income” to varying distributions — Matt Tucker is here to explain what they are and how they are related.
Must-know fundamentals about the US Consumer Price Index
The Bureau of Labor Statistics (or BLS) developed the U.S. CPI in 1913 to measure the change in prices.
Reasons you should stay flexible in your bond portfolio
Forecasting is always a tricky business, but we do believe there are some important factors that will shape the future direction of the bond market and that will have an impact on the way investors should approach fixed income.
Why Safe Haven Assets Could Gather Strength
We could see this nudging up Treasury yields and supporting the U.S. dollar. Gold may be a better hedge in the short run.
Must-read: Why the US economy is strengthening
I anticipate that the weak August payroll report will be revised higher and that inflation should firm. Along with their revised expectation of the path of policy rates, Fed officials seem to be on the same page as me.
Why May’s Inflation Was Just Hot Enough
On June 12, the US Bureau of Labor Statistics reported that US consumer prices rose 0.2% in May, adding to the 0.2% increase seen in April.
Why Treasury Inflation-Protected Securities May Offer Some Value
TIPS may offer some value as inflation breakeven seems modest. TIPS provide investors a hedge against inflation just like gold (GLD) and other commodities (DBC).
Is PCE Inflation Good Enough for a Rate Hike in 2016?
A sharp drop in PCE inflation was caused by the decline in crude oil prices that began in mid-2014.
How to Beat Inflation?
We see inflation-linked bonds such as US Treasury Inflation-Protected Securities (TIPS) as a valuable hedge against inflation. We also like inflation-linked debt in the Eurozone and Japan as a potential substitute for nominal bonds. Market Realist: inflation-linked bonds could turn out to be a better choice Inflation-linked bonds (TIP) provide a hedge against inflation by […]
Bridgewater: What Are Ray Dalio’s Top Investing Ideas?
Founded by Ray Dalio, Bridgewater Associates’ top sell in the third quarter was the iShares MSCI Emerging Markets ETF (EEM).
Are inflation-indexed bonds designed to protect investors?
Inflation-linked bonds are structured to negate the inflation risk of an investment.
The new wave: The US Treasury’s FRNs with a two-year maturity date
For investors who buy short-term, high-quality debts like T-bills, FRNs provide a very good alternative.
What the 30-year TIPS auction says about inflation expectations
Last week, the U.S. Treasury auctioned securities worth $95 billion. These included Treasury bills and Treasury Inflation Protected Securities (or TIPS). TIPS offer bond investors protection against rising inflation. Despite the low bid-cover ratio, market demand for the securities rose.
Why was the short-term T-Bills auction strong last week?
The short-term securities that have already been auctioned last week include four-week, 13-week, and 26-week T-Bills.
Recommendation: You should consider long-end municipal debt
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.
New Cleveland Fed CEO Loretta Mester weighs in on monetary policy
Loretta Mester is the new president and chief executive officer of the Federal Reserve Bank of Cleveland. She has taken over the reins from Sandra Pianalto, who retired on May 31.
Municipal bonds: The must-know outlook for investors
Munis remain a high-quality asset class offering yields that today rival those of Treasuries and many corporate bonds before tax — and look even better after.
Why the 5-year TIPS auction saw lower investor demand
The U.S. Treasury auctioned five-year TIPS worth $16 billion on August 21—lower than the $18 billion auctioned in April. Despite lower issuance, demand for the securities was lower at 2.48x—compared to 2.70x for the April auction.
Must-know: Inflation fighting investments
One of the strongest drivers of fair trade in gold (or IAU) is real interest rates.
An investor’s must-know guide to US Treasury auctions
The U.S. Treasury Department issues Treasury securities of varying maturities to finance government debt. The yield on these securities is determined through a public auction process
Gundlach: Invest in Industrials, Materials, Financial Sectors
“Industrials, materials, and financials are the sectors. . .you want to be invested in,” said Jeffrey Gundlach recently in a CNBC interview.
Why the demand in the high yield bond market rebounded last week
The high yield bond funds flow turned positive last week after a relatively small outflow the previous week, which broke the line of seven straight weeks of inflows.
Do Strong Growth and Weak Inflation Make a Case for a Lower Rate?
The US Bureau of Economic Analysis released its personal consumption expenditure (or PCE) price index today. The PCE index is the Federal Reserve’s preferred gauge of inflation.
JPMorgan Chase Expects Gold to Go Higher in 2019
JPMorgan Chase (JPM) thinks that gold prices (GLD) should go higher. Right now, the Fed is patient on rate hikes.
Strong Growth and Muted Inflation: How Will the Fed React?
While the markets aren’t expecting any changes in rates following the meeting, they’re keenly awaiting the Fed’s strategy to deal with strong economic growth accompanied by low inflation (TIP).
These Assets Could Be Attractive If Fed Rethinks Inflation Course
The Federal Reserve’s two main objectives are stabilizing prices and maximizing employment.
Modern Monetary Theory Might Have Takers, but Gundlach Isn’t One
Jeffrey Gundlach is very concerned about the increasing debt in the US economy.
JPM Likes Gold, as Fed Might Let Inflation Overshoot Target
The Federal Reserve has two main objectives: price stability and maximizing employment.
Buffett versus Dalio on Gold: Whose Advice Should You Take?
When it comes to investing in stocks, Berkshire Hathway’s (BRK.A) chair, Warren Buffett, and Bridgewater’s founder, Ray Dalio, have similar advice.
What Makes Fund Managers So Bearish on Market Prospects?
Out of the investors surveyed, 46% expect global growth to weaken over the next 12 months.
Fed: Jobs Report Could Show Future Rate Hike Path
Fed policymakers are watching the job data closely. The data show whether the US economy is strong enough to withstand interest rate hikes.
Wage Growth Could Catch the Job Market’s Strong Fundamentals
Wage growth could be the most closely watched component of the US jobs report. Wage growth hasn’t consistently gone in the right direction.
What Supports J.P. Morgan’s Bullish Stance on SPY?
J.P. Morgan (JPM) has one of the most bullish views on Wall Street about the stock market outlook in 2019.
What Could US Jobs Report Mean for the Fed and Rate Hikes?
Fed policymakers are watching job data closely, as the data gives the Fed insight as to whether the US economy (SPY) (IVV) is strong enough to withstand interest rate hikes.
Could December’s Wage Growth Spook the Already Volatile Markets?
Wage growth will likely be the most closely watched component of the US (VOO) jobs report.
Why the Fed Could Make Gold Shine Next Year
A major factor weighing on gold prices this year was the Fed’s tightening cycle.
Largest Ever One-Month Rotation into Bonds Signals Pessimism
Another concerning statistic that came to light during the Bank of America Merrill Lynch’s Fund Manager Survey was that investors made the largest ever one-month rotation into bonds (BND).
Goldman Sachs’ Take on Uncertain Stock Market: Get Defensive
Last month, Goldman Sachs predicted the S&P 500 (SPY) will reach 3,000 by the end of 2019.
Will Gold Surge as the Fed Says to Wait and See?
The Federal Reserve Committee plans to meet for the last time in 2018 on December 18–19. The committee is widely expected to raise interest rates (TLT) by 25 basis points, marking the fourth hike this year.
Are Stock Markets Celebrating a Weaker US Jobs Report?
The US jobs report for November was released today.
Could November’s Wage Growth Shake the Markets Again?
Wage growth will likely be the most closely watched component of the US (VOO) jobs report.
Could the Market Be Misinterpreting Powell’s Remarks?
One question we need to ask ourselves is whether yesterday’s surge in the markets (QQQ)(DIA) is justified. The answer depends on our understanding of Fed Chairman Jerome Powell’s comments.
Gold Price Outlook: Analysts Are Watching These Factors
Bank of America analysts contend that gold prices (GLD) should surge over the next year.
Stretched Equity Valuations Start to Weigh In
Since equities have slumped in October, investors are reassessing the price they should be paying for the forward earnings.
CPI Underwhelms Today: Will the Market Heave a Sigh of Relief?
The US consumer price index (or CPI) for September was released today at 8:30 AM EST. Inflation numbers were weaker-than-expected.
Does the Sell-Off Imply Market Repositioning for Lower Growth?
The Dow Jones Industrial Average Index tumbled more than 800 points yesterday as Treasury yields continued their upward march.
Will Equity Valuations Pass the Stress Test of Rising Bond Yields?
For the last few days, the bond markets have seen sell-offs due to stronger-than-expected economic data and hawkish comments from the Federal Reserve.
US Equities Down on Rising Rate Fears: Watch Out for CPI Next
Increasing interest rates spooked investors again today as US stocks dropped sharply amid rising Treasury yields.
Will Physical Gold Demand Be Deciding Factor for Gold in H2 2018?
The demand for gold in India (INDA) was lukewarm in the first half of the year, mainly due to stronger equity markets and higher gold prices measured in rupees.
Is the Current Sell-Off a Blip—or the Start of a Downtrend?
Whether the recent sell-off in the bond and stock markets is just a blip or the beginning of a sustained downward rally will depend on the upcoming US economic data.
What to Look for in the Fed’s September Meeting
The Fed is scheduled to meet on September 25–26. The Fed is widely expected to raise rates by 25 basis points during the meeting.
What Will the Fed Look for in the August Jobs Report?
Job numbers give Fed policymakers clues about whether the US economy (SPY) (IVV) is strong enough to withstand interest rate hikes.
As Earnings Season Comes to an End, Markets Focus on Fed, Trade
The Fed’s annual economic policy symposium starts Thursday. Fed chair Jerome Powell will speak on “Monetary Policy in a Changing Economy.”
Could Physical Demand Come to Gold’s Rescue in H2 2018?
The rupee has depreciated by ~7.0% year-to-date against the US dollar. This event caused local gold prices to rise.
Fresh Sell-Off Hits Gold: Is $1,200 the Next Stop?
Gold prices (IAU) have been on a losing spree since mid-April due to the US dollar’s strength and diverging monetary policies.
Oil Prices Soar on OPEC Agreement—What Does It Mean for Gold?
After its June 22 meeting, OPEC decided to increase its output. However, this increase was lower than what the markets expected.
How the Yield Spread Changed the Outlook for the Economy
In the May LEI report, the yield spread had a net impact of 0.14 (or 14.0%).
Why There Could Be More Room for Inflation Growth
The PPI for final demand in May is reported to have increased by 0.5% month-over-month.
FOMC: We Are Not Declaring a Victory on Inflation
The FOMC’s June statement was released on June 13, and the outlook for inflation remained upbeat.
Why Does the Fed Expect Unemployment to Fall Further?
The US Federal Reserve has a dual mandate of achieving maximum employment and stable prices (TIP) in the economy.
How Could High Inflation Affect the Fed?
During the Fed’s May meeting, the inflation (TIP) target was described as “symmetric,” suggesting that the 2% target would not be used to initiate any dramatic changes to US monetary policy.
Why This Week Could Define the Direction of Monetary Policy
The central banks of the US, EU, and Japan are scheduled to meet this week.
What Now as the US Fed Is Close to Meeting Its Targets?
As of June 1, the unemployment rate in the US has dropped to 3.8%—its lowest level in the last 18 years.
Louis Gave Believes Inflationary Boom Will Support Gold
Gave believes the disinflationary boom is the natural state of capitalism and shifts to an inflationary boom every 30–40 years.
This Economic Data Point Decreased the Odds of a 4th Rate Hike
In the current economic climate, we can expect the Fed to take a step back with respect to interest rate hikes.
Which Sector Posted the Most Job Gains in May?
As per the May ADP employment report, job growth in the professional and business services sector continued to be the key driver for jobs additions.
Why the FOMC Isn’t Confident about Sustained Inflation Growth
The FOMC’s May meeting minutes indicated that some of its members had turned bearish on inflation (TIP).
Key Takeaways from May’s FOMC Meeting Minutes
The most recent FOMC meeting was on May 1–2. At the meeting, the range for the federal funds target rate was left unchanged.
Falling Weekly Claims Signal Overheating Job Market
The Conference Board uses average weekly unemployment claims as a constituent of its Leading Economic Index (or LEI).
Will Yield Spreads Continue to Decline?
The US bond markets remained under selling pressure as bond yields, especially at the short end of the curve, continued to shoot up, while the long-term yields remained subdued.