Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
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Watch the PE cycle
The broad force behind stock market returns that nobody talks about. The S&P 500 made a new high last week. The economic expansion has stretched to a full six years this month despite five recession scares in the last three. The always-bullish consensus feels vindicated….
Oil isn’t the variable to worry about with the economy
A prominent new book on recessions and a recent piece by Niall Ferguson argue that energy shocks are among the most reliable causes of recessions, a thesis that has found a receptive audience given the Iran war and the sharp rise in oil prices that…
The Slowest Business Cycle on Record
Also on Advisor Perspectives Summary: Comparing business-cycle-related primary trends of the falling 2-year Treasury yield shows that this is the slowest business cycle since WWII (WWII is a rough place where Treasury yield data and an independent Fed began). In general, business cycles were sharper and…
3-yr rate call performance
This writing presents the value of my interest rate calls back to November of 2022 (3.2 years ago) where I first advocated owning US Treasury duration in anticipation of rates falling in the ongoing, but slowly evolving, downside of this business cycle (note: I define…
Skeptical of Truflation’s disinflation
Truflation is a newer private real-time statistic of inflation that comes out each day (similar to the LDEI) with more granularity to see trends changing faster, be more timely, and fill-in when official data is absent (like last year’s government shutdown). Since its inception in…
The Fed moves to neutral with an upbeat forecast
In my piece before the Fed meeting, I expected the Fed/Powell to acknowledge economic improvement with short-term yields rising. I got half of that right. The Fed acknowledged economic improvement in the statement and press conference, but not to a degree that moved interest rates….
Economic improvement awaits Powell’s ratification
The Fed will announce the results from its two-day meeting tomorrow. As is widely accepted, they won’t change the Fed Funds rate, but I expect Jerome Powell to begin acknowledging economic strength in the press conference, which he has yet to do. Much of the…
FOMC meeting was ultimately hawkish
The first thing to mention is that I was wrong about the Fed being paused after the last meeting, they cut another 0.25% yesterday. What I wasn’t wrong about is the trajectory of the economy and Fed as it gets progressively better and more hawkish…
The 6% deficit, post-lore economy
Three years with five reliable recession signals, five recession scares, and no recession Also on Advisor Perspectives At the last FOMC meeting press conference, Chairman of the Federal Reserve Jerome Powell, gave an explanation why some wanted to pause cutting rates at the December meeting…
After two cuts, the Fed is back to paused
Yesterday’s FOMC meeting was a meaningful pivot that I suspect will result in significantly higher Treasury yields (particularly at the front-end/belly of the curve) over time to price-out the cutting that has been priced in, not unlike the end of last year. For a fifth…