Big swings in financial markets can affect confidence, causing companies and consumers to curtail spending.
Ben EmonsSr. Portfolio Manager Head: Fixed Income/Macro Strategy
Ben Emons is a Senior portfolio manager and head of FI/Macro strategy at NewEdge Wealth. Previously, he was a Managing Director at Medley Advisors and held roles of Head Credit Portfolio Management at Intellectus Partners and portfolio manager at PIMCO and Nuveen Investments. The opinions expressed are his own.
Neither bonds nor equities are pricing in much of a premium for the prospect of faster inflation, increasing the risk of a correction.
A resurgence in the U.S. currency can tighten financial conditions and reverse some of the good spirits currently embedded in global markets.
History shows that divergences between economic and financial market volatility only last for brief periods.
Debt investor skepticism contrasts with the general notion among economists that companies with large amounts of leverage will benefit.
A narrowing gap between short- and long-term rates should provide a boost to risk assets and the economy.
The effect may be more pronounced this year as tensions around the U.S. debt ceiling and competing tax bills cause the greenback to appreciate.
Overnight index swaps suggest the economy will be weak enough a year from now to warrant rate cuts.
The next bear market is likely to be characterized by a slow grind to very low returns rather than a sudden sell-off.
When central bankers are predictable, there tend to be fewer surprises for markets.
There are two potential trouble spots: U.S. investment-grade corporate debt and European government securities.
Markets see a risk that Catalonia may inspire populist movements across Europe, threatening the euro.
Periods of slow inflation often lead to bouts of faster inflation, just like when energy prices bottomed in early 2016.
Rising debt yields that reflect stronger economic growth may actually function as an “easing” for equities.
A makeover at the central bank is on the horizon, and it may be bigger than the market currently discounts.
Since the 1990s, the assumption has been that when things get bad, central banks will come to the rescue.
There's a risk the greenback will "overshoot" on the downside, creating a crisis of confidence.
Inflation may not be as stable as generally believed, and the bigger risk may be disinflation.
When risk is not measurable, the distribution of possible outcomes is highly uncertain.
Corporate debt and German bunds may be the most at risk from a sell-off.
