Ten-year Treasury yields bottomed at roughly 3.57% about two days before the Fed first cut its Fed Funds rate by 50 basis points on September 18th. The bad news, obviously, is that rates have backed up by 70 basis points since then. The good news is that our work has shown that this rise has been due more to expectations for stronger real growth rather than growing inflationary expectations. Unfortunately, the rate cuts have not yielded any easing in the housing market as had been hoped. Mortga… View More
Equities fell last week (S&P 500 -1.35%), marking the second weekly decline in a row. Large technology was the drag, with Treasury yields continuing to rise. Best sectors were communication services (+1.53%) and consumer discretionary (+0.48%); worst sectors were technology (-3.27%) and real estate (-3.05%). Key Takeaways: Real GDP in 3Q was solid, growing 2.8% q/q versus 3.0% in Q2. Nominal GDP slowed to 4.7% from 5.6%. Government spending alone added 0.9%, meaning private real … View More
This phenomenon is undoubtedly a function of what Giscard d’Estaing deemed the “exorbitant privilege” of possessing the world’s reserve currency. Financially speaking, you can get away with murder. More than 54% of America’s debt matures in the next three years. The weighted average cost of our debt is 3.39%, or a level lower than every part of the yield curve. Without a meaningful decline in interest rates and inflation – or another round of QE – America’s interest expense, alr… View More
As The Strategas Washington team has repeatedly reminded us this year, election years, especially those in which incumbents are running, tend to be quite good for stocks. With only 14 days until election day and the market up almost 24% YTD, it seems like a good past will be prologue. Perhaps more interesting now is what performance might look like postelection day. As one might suspect, the average gain from election day until the end of the year is also positive, albeit smaller. There was only… View More
U.S. equities rose for the fifth week in a row (S&P 500 +1.13%) closing at an all-time high. Banks were strong as Friday earnings boosted the stocks. Treasuries were weaker (the 10-year yield is up 35 basis points [bps] over the past eight sessions.) Best sectors were technology (+2.51%) and industrials (+2.11%); worst sectors were utilities (-2.55%) and communication services (-1.28%). Key takeaways: Core CPI was +0.3% (above consensus of 0.2%). Headline CPI was +0.2% (above con… View More