Hanging Curve

It is a message we keep hearing about in the mainstream financial media today. Bonds yields are on the rise. The optimists attribute the increase to a budding phase of accelerating economic growth and the higher inflation that comes with it. The more skeptical among us believe that an inevitable outbreak of higher inflation will induce the Fed to tighten more quickly than currently expected. Despite their differing views, both leading narratives rely on the key underlying premise that inflation is going higher. But what about a third outcome? What if higher inflation never comes to pass? And what if this takes place at the same time that the economy sputters while the Fed is still raising rates? What then?

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The Bond Bull Market Is Over

The financial media headlines have been dominated over the past week by the latest bold declarations. Treasury yields are on the rise, and “the bond bull market is over!” Except that it’s not over. Not even close to starting to be over as a matter of fact. At least not yet. For despite its extraordinarily advanced age and recent fall coupled with the bold proclamations from some notable bond gurus, the 37-year old bond bull market still remains very much alive today.

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10 Lessons On A Major Market Risk For 2018

It is a major market risk for 2018 that nearly every major market pundit is talking about as we head into the New Year. It is the flattening yield curve. For if the yield curve becomes “inverted”, then trouble is certainly ahead for the U.S. economy and the stock market. But does it? What exactly does a flattening or inverted yield curve really mean for the stock market investment outlook from an impact and timing standpoint? Let’s take a closer look.

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Has The Plunge Begun?

It was one of the key early warning events that took place ahead of previous major bull market peaks. And despite the continued resilience of stock prices and proclamations of new all-time highs on some of the benchmark indices as recently as Thursday, we have seen some notable splashes on this front in recent weeks. It is the flattening of the yield curve toward inversion. And it is worthwhile to consider the following: has the long-anticipated plunge in the yield curve finally begun?

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Dancing About The Yield Curve

It is one of the greatest aspects of capital markets. Investing is just as much an art as it is a science. And unlike many of the arts that can be discussed in terms of ordinary life experiences, investing along with the economics and finance that are underlying it are often complex, multi-dimensional across space and time, sometimes nebulous and very much subject to the interpretation of each individual participant in the market place.  So despite being a science grounded in the historically quantitative and definitive that have has taken place in the past and present, investing is just as much if not more so an art in interpreting this music from the past in singing about the future.

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