Salient to Investors: 5-yr inflation is at 1.9% annual, its lowest since the 1960s. The Atlanta Fed sees a 6% probability that the CPI for April 2017 will be lower than the CPI for April 2012. Minneapolis Fed President Narayana Kocherlatoka said inflation will run below the Fed’s target of
READ MORE... →Salient to Investors: Enthusiasm for speculative-grade bonds is at unprecedented levels – a Credit Suisse index is at a record-low 5.9 percent. Kansas City Fed President Esther George said prices of assets such as bonds, agricultural land, and high-yield and leveraged loans are at historically high levels. Drew Matus at UBS Securities said
READ MORE... →Salient to Investors: The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room. Chris Turner at ING said yesterday will go down as the first day European policy makers fired a shot in the
READ MORE... →Salient to Investors: International purchases of U.S. stocks, bonds and other financial assets were more than twice as much as forecast in November as investors sought shelter from a global economic slowdown. Millan Mulraine at TD Securities sees further inflows. The World Bank projects the world economy to grow 2.4 percent in 2013 versus a June
READ MORE... →Salient to Investors: Royal Bank of Scotland said sales of CDOs linked to property are poised to climb to as much as $10 billion in 2013, 10 times the level of 2012 as investors wager on a real estate recovery and the Fed pushes down borrowing costs. Richard Hill at RBS said the deals could
READ MORE... →Ben Stein says: The US is borrowing 40 cents for every dollar it spends, a terrible situation. The government has been living beyond its means for years, is spending too much money and heading for default – a real doomsday scenario. The US will have a $20 trillion deficit within 36
READ MORE... →Salient to Investors: David Kostin at Goldman Sachs said volatility – the drawdown risk – will deter investors from moving into stocks from bonds in 2013 even as dividend returns exceed fixed-income yields. Kostin said most investors will sell US government bonds if losses push the 10-yr Treasury yield to 3 percent from 1.85
READ MORE... →Salient to Investors: Charles Plosser at FRB of Philadelphia said: The latest stimulus steps do little to boost growth and the record stimulus risks a surge in inflation, and may not speed up the economy but actually prolong it. Low interest rates reduce returns for savers and do little to encourage businesses to
READ MORE... →Salient to Investors: The era of increasingly cheap money is showing signs of ending in the mortgage bond market. Bill Gross at Pimco said bond investors should anticipate reduced returns as bets on mortgage securities are over in terms of the capital appreciation – expect total returns in 2013 of 3 to 4 percent. Brean
READ MORE... →Salient to Investors: Justin Urquhart Stewart at Seven Investment Mgmt said the coming year depends a lot on the German elections, and the end to the boom in the bond markets is a matter of when rather than if. The fudging of the fiscal cliff issue means a few more crises
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