Tag: CPI

High Yield Bonds Offer A Positive Real Yield

High Yield Bonds Offer A Positive Real Yield

The ICE BofA High Yield Index stood at 9.5% at week's end (measured daily), whereas CPI (a monthly measure) stood at 8.2% as of September. Therefore, investors enjoy 130 basis points (the delta between the High Yield Index and the CPI) of positive real yield. The fact that positive real yield exists in the High … Continue reading High Yield Bonds Offer A Positive Real Yield

With Core Inflation Up The Fed Won’t Change Its Path

With Core Inflation Up The Fed Won’t Change Its Path

We continue to expect the Fed to raise its Fed Funds Rate by 75 BPS in early November. Core inflation was up 0.6% month-to-month (6.6%) for the year. Shelter was the primary driver of Core Inflation as it carried a 32.5% relative weighting and was up 0.7% month-to-month. Food was up 0.8% month-to-month and has … Continue reading With Core Inflation Up The Fed Won’t Change Its Path

The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield

The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield

Could the NASDAQ re-test the COVID lows of March 2020 when it sat around 6,900? Yes. That would require a prolonged recession (which we expect) AND The Fed not restarting its ultra-dovish monetary policy of Quantitative Easing combined with a near zero Fed Funds Rate. Who knows how the Fed will behave in 2H 2023 … Continue reading The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield

Core CPI Runs Hot. Yields To Move Higher.

Core CPI Runs Hot. Yields To Move Higher.

August Core CPI was 6.30%, ahead of the Cleveland Fed's 6.25% estimate (table below), and up from July's 5.90% print. Headline CPI was 8.30%, down from July's 8.50% print given oil's retreat, but ahead of the Cleveland Fed's 8.24% estimate. Our view is that with Core CPI at 6.30%, the Fed will likely raise by … Continue reading Core CPI Runs Hot. Yields To Move Higher.

Fed Funds Rate – CPI = Accommodative Policy

Fed Funds Rate – CPI = Accommodative Policy

Today's chart represents the difference between the Fed Funds Rate less the year-over-year change in the CPI plotted monthly. The difference between the Fed Funds Rate and the year-over-year change in the CPI is almost as negative (and therefore accommodative) as it has ever been. The Fed has its work cut out in its battle … Continue reading Fed Funds Rate – CPI = Accommodative Policy

Powell Should Raise By 100 Basis Points

Powell Should Raise By 100 Basis Points

The 2-Year Treasury yield sits at approximately 3.42%. Therefore the Fed ought to raise the Fed Funds Rate by 100 bps which would put the Fed Funds Rate lower and upper bound at 3.25-3.50%. The next FOMC meeting will be held September 20th and 21st. Simultaneously, the Fed ought to stick to its plan of … Continue reading Powell Should Raise By 100 Basis Points