Quarterly Strategy Update: The Investment Consequences of a Normalization in Long Rates

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On this quarter’s conference call, Steve and Bryce dissected US Treasury bonds, discussing the message of the rates market and how this is directing asset allocation. The following slide deck covers their discussion of the following: The bond market has enjoyed a 10-year tailwind from a collapsing term premium. We believe this is probably over […]

Wages Are Rising and The Phillips Curve is Not Dead

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The Phillips Curve (the relationship between wages and the unemployment rate) finally awoke from its slumber with today’s unemployment report showing private sector wages rising 2.9% year-over-year and non-supervisory wages rising 2.8% year-over-year, the fastest growth rate since 2009. Even more important than that, though, is that all indications continue to point to even faster […]

Thoughts on the Term Premium

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As many have documented, the main channel of transmission for the Fed’s quantitative easing policy was via the term premium component of US treasuries. As the Fed’s balance sheet doubled from 2010 to 2015, the term premium embedded in US treasuries fell from 2.5% to -75bps. The Fed is now shrinking its balance sheet, which […]

What We’re Reading

Straight Talk

Recently we were asked about the latest books and ideas contributing to our economic analysis. Here’s an incomplete list of what we’ve been reading this summer. Straight Talk on Trade: Ideas for a Sane World Economy  By Dani Rodrik A discussion of free trade and how nations can sensibly chart a path forward in today’s […]

Quarterly Strategy Update: What We Know, What We Think & What We Are Unsure Of

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Recently, fears of a slowdown in global growth brought on by a trade war have led to turbulence in cyclical assets. The US Dollar has risen while commodities and emerging markets have struggled. The Chinese Yuan has depreciated significantly, recalling fears of the 2014-2016 industrial recession. This quarter, we examine the outlook for economic growth […]