10-Year Treasury Yield Tops 3%
The yield on the 10-year U.S. Treasury notes hit its all-time high in more than four years at 3%. Yields have been a hot topic for many investors around the world as its movement significantly triggers the global finance markets and currencies around the world. Yields have been driven higher as strengthening inflation prospects added to expectations for a faster rate of monetary tightening from the Federal Reserve. One head of Equities in London claims, “The three percent lev
Tensions Arise in the Eurozone
With tensions rising over trade disputes and the strengthening of the euro, the economy in the Eurozone has started to slow down. Taking into account all global market events, the European Central Bank (ECB) is now contemplating rate movement and rethinking its decisions on proceeding forward. Analysts have also dialed back their forecasts for when the ECB might increase short-term rates this year. Trade disputes have been an important concern for the central bank because the
The Flattening Yield Curve
Despite a healthy equity risk premium and strong fundamentals, a flattening yield curve is causing concerns among investors. The gap in long- and short-term borrowing is hovering near its lowest in over ten years. While it might be true that flattening yield curves historically have significantly increased the probability of recessions, incoming NY Fed chief John Williams, and Chicago Fed President Charles Evan appeared to downplay concerns. Williams cautioned investors to wa
Transformation of Retail Locations
With hundreds of retailers closing down stores across the country, malls have witnessed a sad reality in the modern world: foot traffic is declining. Online sales are cannibalizing on sales of retail stores, a story that is hardly new to most investors. While there is a negative investment stigma associated with malls, the recent transformation in investment should be watched carefully. Major owners of strip malls, such as the Federal Realty Investment Trust, are aware of the
Splitting Bets hit Facebook Stock
With the world largest asset manager, BlackRock ($6.32 tn), is increasing its holding in the Social Media giant, the world’s largest stock-picking fund stands out amongst other investors. Other funds managers have reduced or eliminated their position amidst controversy about the company’s data management. This position might reveal itself as an endorsement of Facebook by a major outside shareholder at a time when arise over stricter regulation. Among the bears are Swiss Vonto
British Pound: Momentum?
On the US perspective, The British pound rose to the highest level since the Brexit referendum in June 2016, reaching $1.44. Besides a more positive outlook on the situation of Brexit, raising expectations of an interest rate hike by the Bank of England are seen as the culprits. Data from the Commodity Futures Trading Commission shows leveraged funds as most bullish on the Pound since 2014, marking the fifth successive week of improved sentiment towards the UK currency. Curr
Why Policymakers Shrug at Market Volatility?
The Fed will continue to use its methodical approach on slowly increasing interest rates after the Federal Open Market Committee (FOMC) meeting in March. One statement that caught a lot of attention last week was the relatively high chance for policymakers to change the current plan for two or three hikes in the year of 2018. Even though the full picture moving forward is a bit cloudy, there are talks of a mild overshoot of the inflation target of 2% by 2020. Keep in mind tha
Are Government Bonds a Safe-Haven Asset against Equity Market Volatility?
Events that have recently been triggering the market have stimulated investor curiosity around the relationship between government bonds and the returns of equities. Looking back, the S&P 500 took a major downturn in January and February of 2018 due to poor market conditions. Not only that, but the 10-year government bonds also showed a positive trend from 2.6% - 2.8% in the beginning of the year. The reputation of bonds as a “safe-haven” asset during a time of crisis is bein
Direct Listings: Do the Investment Banks Have to Worry?
With the direct listing in the public market of Spotify S.A, many news articles have appeared in regard to the future of underwriting. A direct listing allows a company to transfer its shares to an exchange directly, avoiding the high fees of investment banks and the quiet lockup period. Yet, it remains critical for investors to take a look at the circumstances that led Spotify to choose a direct listing. While it is true that the range was continuously adjusted upwards in t
Earnings Week Volatility
With increased volatility in recent weeks, the US market is anticipating a tough earnings week. Investors fear missed expectations could change the narrative of strong global fundamentals. Strong earnings are believed to decrease volatility in current market and return optimism to the stage. With a market correction for the first time in two years, the SP500 closed below its 200-day moving average, down 2.6% from the beginning of the year. The S&P 500 recently traded at 16.3