Contributor: Stephen J. Douglass
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Asset Manager Panelists Agree: “There’s Beta in My Alpha!”
NISA’s CEO and Head of Investment Strategies David Eichhorn participated in a panel discussion at the Treasury Market Conference held this Fall at the Federal Reserve Bank of New York. This was the 10th annual version of this conference, which was established by the Fed, Treasury, SEC and Commodity Futures Trading Commission (CFTC) to analyze…
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Fiscal Sustainability and the Market for U.S. Government Debt
Watch Chief Economist Stephen Douglass as he examines America’s ever-rising debt burden, reviews the difficult policy options for addressing it and considers the implications for the Treasury market. The discussion is moderated by NISA’s Client Services Managing Director Cheryl Hanson. Watch here The materials from the presentation are available upon request.
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The Labor Market Approaches a Tipping Point
The U.S. economy suffered from the worst labor shortage in at least six decades during the pandemic. This imbalance peaked in late 2021 with twice as many job openings as unemployed workers and wage inflation running at a four-decade high around 8% annualized. The Fed recognized the severity of the problem (a couple of quarters…
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Fitch Downgrade Highlights Deteriorating Fiscal Outlook
Fitch Ratings surprised market participants late Tuesday by downgrading the sovereign credit rating of the U.S. Government from AAA to AA+, citing “expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance…over the last two decades that has manifested in repeated debt limit standoffs…
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Keep Hiking After Something Breaks? The Fed Balances Financial Stability and Price Stability
Veteran Fedwatchers like to quip during tightening cycles that “the Fed will keep hiking until something breaks.” They are only half joking. The path of past tightening cycles is littered with the roadkill of market participants who got caught on the wrong side of a duration and/or convexity bet. Well now something has finally broken,…
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Financial Conditions Have Consequences: SVB’s Failure and the Risk of Contagion
For several months now, many of us have been wondering: why hasn’t anything blown up yet? The Powell Fed’s historic tightening campaign has caused relatively few episodes of financial distress (with the notable exception of crypto). The sudden failure of the nation’s 16th largest bank – the 2nd largest bank failure in American history –…
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The Boogieman in the Fed’s Closet
A terrifying specter has reappeared in the darkest corners of the Eccles building. For the first time in 40 years, the Federal Reserve faces a material risk that inflation expectations could de-anchor and cause high inflation to become entrenched in the U.S. economy. Like a toddler afraid of the boogieman in the closet, the Fed…
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Back to School with Mr. Powell
Like so many K-12 teachers having to remind their students about the lessons they forgot over the summer, Federal Reserve Chairman Jay Powell’s speech in Jackson Hole last week was in many ways a recitation of the message he and his colleagues have delivered all year. There is no denying that Fed communications have gathered…
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Jay Powell’s Manic Monday
After two years of pandemic firsts, we thought we’d used the adjective “unprecedented” for the last time in this cycle. Then the Federal Reserve did something on Monday that we’ve never seen them do before: intentionally leak a monetary policy action through the financial press two days prior to a Federal Open Market Committee (FOMC)…
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Stuck in the Starting Gate: 20y Treasury Futures Update
When the CME Group initiated trading on the new 20-year Treasury futures contract in March, we expressed cautious optimism that the new product would gradually develop liquidity to become another tool for hedging long duration interest rate risk. That optimism has been disappointing so far. It seems the 20-year contract never left the starting gate.…