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Takeaways on the Yield Curve Inversion
Economic Blog A closely watched point on the Treasury yield curve has fallen negative for the first time in this economic cycle. As shown in the LPL Chart of the Day, Yield Curve Inversion Raises Economic Questions, the spread between the 2-year and 10-year Treasury yields fell as low as -2 basis points (-0.02%) in trading on August 14. Read
A Sustainability Framework: Societal Shifts as Investment Risks
Successful long-term investing depends upon the identification of sustainable companies. We believe traditional investment analysis tends to underestimate some risks faced by companies today. In particular, we see rising risks to sustainability from the potential breakdown of relationships between industries and companies with society. Each company and industry operates under a "societal license” that, if damaged or revoked, can ultimately
ECB Signals Easing, But What’s Left in the Policy Arsenal?
Acentral banker’s nightmare is losing control of inflation expectations. Whereas decades ago the challenge facing major central banks was reining in overly high inflation expectations – a process that ushered in central banks’ independence and inflation targets – the European Central Bank’s (ECB) challenge today is reviving unduly low expectations up toward its stated aim of “inflation rates below, but
5 Key Investment Themes for the Remainder of 2019
Rick Rieder and Russ Brownback highlight the investment themes that they think will drive markets and dominate debate within the investment community over the next several months and beyond. Over recent weeks, we have been vocal about five “big themes” for markets that will likely dominate the second half of 2019. These themes take stock of a collection of secular
Interest Rates: Naturally Negative?
It is no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative. Last week the German 30-year government bond yield dipped into negative territory for the first time ever. Around $14 trillion of outstanding bonds worldwide, or 25% of the market, now trade at negative yields, according to Bloomberg. What was once viewed as
On the Other Hand
Memo to: Oaktree Clients From: Howard Marks Re: On the Other Hand It often happens that just as I’m about to release a memo, I come across something that absolutely has to be incorporated. That was the case on June 12, the day “This Time It’s Different” was published. I was reading a first-quarter report from Ruffer, a London-based money
Rising Risk of No-Deal Brexit
With the pound sliding to two-year lows, currency markets are signaling a higher probability of a no-deal Brexit. But the fallout from no deal would hurt the rest of Europe, too, and add to downward pressure on euro-area bond yields. Much has changed since we wrote our last Brexit update in May: the UK has a new prime minister (Boris
Outlook on Europe
European equity markets have been caught in the middle of opposing forces, mainly growing tensions around global trade and increasingly dovish central banks. This has pushed European government bond yields to fresh lows and caused bond-sensitive sectors to climb higher, further stretching valuations. In this environment, it is becoming increasingly important for investors to be discerning, to focus on fundamentals
Weighing the Week Ahead: Four Risky Hurdles
The economic calendar is massive, and that is just the start. Earnings season is in full swing. US/China trade talks resume. And finally, the FOMC announces its interest rate decisions. Expect plenty of commentary on the individual news items, but the real question is: How deftly can the market leap the four hurdles? (Data, Earnings, Fed, and Trade = DEFT).
Stage is Set for a Rate Cut, while Trade Contagion Spreads to Japan and Korea
School schedules make summer an ideal time to get away. During those vacations, families often encourage loved ones to make a clean break from business, to reconnect and recharge. And so, a worker’s greatest wish is for a quiet summer news cycle. But in my own experience, that wish is rarely fulfilled. In 2008, I was in a craft barn