Download PDF Introduction A specter is in the horizon for US investors: the specter of inflation. As the fed policy objectives shifted toward allowing a brief term inflation “overshoot” the 10-year and 5-year breakeven inflation rates, the differential between TIPS and nominal bond yields, have reached new heights in the Read more…
Download PDF Introduction We continue our series on the impact of negative interest rate policies (NIRP) on various asset classes by looking at equities valuations this time. The years after the Great Financial Crisis have brought secular macroeconomic, policy and structural shifts, which have resulted in an unmatched collapse in Read more…
Download PDF Two years ago, in our article “Dollar repatriation? Different story told by cross-currency swap”, we have looked into the 2018 environment of the cross-currency basis market. This year has brought about a major funding crisis and that caused this topic to be worth revisiting since COVID-19 led to Read more…
Download as PDF United States US markets started the week on Tuesday after remaining closed on Monday for the Presidents Day holiday on an upbeat tone, the bears took over sentiment for the second half of the week leading to losses on the week, with the S&P500 closing at 3,337 Read more…
In mid-September, there has been a liquidity crisis in the money market of secured overnight borrowing. We have analyzed this in an article published one month ago, headed “Liquidity Squeeze: What is the Repo-Scarcity Premium?”. Since then, the Federal Reserve proceeded to inject more than 230 billion over the period Read more…
How expensive can it be to borrow USD cash for one night collateralizing fully with the US Treasuries? Given current rates, perhaps somewhat above 2% would be reasonable. What about 10%? This is how much some of the participants in the USD Repo market had to pay to provide themselves Read more…
Introduction As we noted in our final publication of 2017, the year 2017 was characterized by very low volatility and stable positive returns on the majority of stock markets. This took place even despite the start of stimulus withdrawal by major central banks which was seen in the gradual increase Read more…
The aim of this article is to analyse the popular Fed Model, pointing out its strengths as a descriptive tool but warning investors against its alleged predictive qualities. The Fed Model is a stock valuation approach introduced in the late 1990s. It asserts that the acceptable earnings yield (the inverse Read more…
Trump’s election and his plan of loose fiscal policy put upward pressure on US inflation. In order to cool down the economy on the verge of full employment, FED raised rates in December and March and has promised two other hikes in 2017. Hiking fed fund rates is not the Read more…
United States Amidst continued geopolitical uncertainty and mixed corporate earnings results, US equities experienced a week of sideways movement. Later in the week however, the major indices recovered some of their previous week´s losses as confidence in president Trump´s tax reforms strengthened again. US treasury secretary Steven Mnunich announced that Read more…
United States US stocks took a break after last week gains. The S&P 500 fell 0.3% closing the week at 2355.54, while large-caps were flat with the Dow Jones at last week’s levels. One of the major drivers of financial markets was the FED releasing the minutes of its mid-March Read more…
United States The S&P 500 closed at $2,362.72, up 1.44% when compared with the beginning of the week, where opened at $2,329.11 following concerns about President Trump’s ability to secure the passage of the tax reform after failure of his healthcare reform. The other major U.S. equity indices, the Dow Read more…
United States The S&P 500 closed at $2,372.60, slightly depreciating when compared with the beginning of the week, where it was standing at $2,375.32, but still higher than the weeks’ low of $2,357.98. Similar was the fate of both the Dow Jones Industrial Average and the NASDAQ, as they closed Read more…
Market Recap 05-03-2017 United States Despite experiencing a downward correction towards the closing of the week, US equity indices reached new record levels. The Dow Jones Industrial Average reached a new record level by breaching the 21.000 mark. On Wednesday, it peaked at 21.115, to close the week at 21.005, Read more…
This article will introduce an unconventional way to profit when interest rates rise using inverse ETFs. We will show the upsides and downsides of these tools, focusing on how they could be used in today’s American market. Inverse ETFs could be a useful tool to deal with the possible future Read more…