Monetary policy

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Gold Shimmers in the Face of Fed Tightening

By Mark Heppenstall | November 9, 2017

After five years of disappointing returns, this year’s double-digit gains in gold prices have surprised many investors, especially in light of the Federal Reserve’s (Fed) continued monetary policy tightening. Conventional wisdom held that as the Fed hiked short-term interest rates, the higher opportunity cost to own gold would put additional downward pressure on prices.

A Quick Guide to the Fed Chair Nominees

By John Swarr | October 26, 2017

This week’s Monday Morning O’Malley highlighted the upcoming selection of the next Federal Reserve (Fed) chair. The top candidates for the nomination include Jerome Powell, John Taylor, Janet Yellen, Kevin Warsh, and Gary Cohn. The Chart of the Week shows recent betting odds on who will receive the nomination. While the odds are fun to talk about, this week’s write-up covers the candidates’ viewpoints and policy stances so the risks behind the candidates can be anticipated. Investors should be prepared for any outcome by understanding how each candidate would lead the Fed on key issues including monetary policy, the balance sheet, transparency, and regulation.

Geopolitical Risks, Market Forecasts and a Tax Reform Clause

By Mark Heppenstall | August 30, 2017

While trading slowed during the summer months, as it historically does, the headlines did not! From squashed healthcare reform to placing sanctions on North Korea to the Amazon/Whole Foods deal, there was no shortage of market-moving news in the last several months. Before we unofficially say goodbye to summer next week, we checked in with CIO Mark Heppenstall for his take on what’s been happening in the news cycle and its impact on markets as well as what investors can expect leading into the final quarter of 2017.

Jackson Hole Conference will be Closely Watched

By David O'Malley | August 21, 2017

Beginning on Thursday, the Kansas City Federal Reserve Bank hosts its annual conference in Jackson Hole, Wyoming. The annual meeting draws central bankers from around the world, including Janet Yellen from the U.S. Federal Reserve (Fed) and Mario Draghi from the European Central Bank (ECB).

It’s a Cruel Summer for Alpha-Seeking Investors

By Jen Ripper | August 3, 2017

Summer conjures up warm memories of family vacations, lazy days, endless ice cream, amusement rides, walks on the beach, barbeques, and of course, occasional heat waves. Bananarama’s summertime hit “Cruel Summer,” which touches on oppressive heat, climbed the Billboard charts in 1984. Appropriately, the music video was shot during a heat wave.

For some investors, it may seem like a cruel summer with limited opportunities to generate alpha. It certainly feels like most major markets are heating up as risk premiums continue to grind tighter, leaving investors commiserating.

Investors Watching for Clues in the Federal Reserve Meeting and Second Quarter GDP This Week

By David O'Malley | July 24, 2017

Last week, markets traded mainly range bound as economic data and corporate earnings met expectations. In the week ahead, market participants will be closely watching for any clues from the Federal Open Market Committee (FOMC) statement on Wednesday. The Federal Reserve is widely expected to keep interest rates unchanged, but the meeting could provide important information on future policy.

Bond Yields Rise Around the Globe

By David O'Malley | July 10, 2017

Bond yields have been rising around the globe for the last few weeks as central bankers discuss the continued normalization of monetary policy. The unprecedented monetary policy used since the financial crisis in 2008 is slowly being removed. Despite the reduction in stimulus, monetary policy is still accommodative. I expect the trend of rising rates will continue over the next few months as the supply and demand equation for debt is being reevaluated amid less support from central banks.

Beware of a Flattening Yield Curve

By David O'Malley | June 19, 2017

In a much anticipated move last week, the Federal Reserve (Fed) increased short-term interest rates by 25 basis points (bps). The Fed also outlined parameters for shrinking its $4.5 trillion balance sheet. Once the process begins, it is expected to take at least four years to reduce the balance sheet by approximately $2-2.5 trillion.

Big Week Ahead for Central Banks

By David O'Malley | June 12, 2017

Last Friday presented the first round of cracks in the stock market in recent memory. The technology heavy NASDAQ 100 Index suffered a 2.4% decline with many of the high… Read More

May Employment Report Comes in Below Expectations and Raises Questions about the Economy and Fed

By David O'Malley | June 5, 2017

The May employment report was released on Friday and was weaker than expected. On the positive side, the unemployment rate fell to 4.3% from 4.4% in April. The current level of unemployment should be putting upward pressure on wages; however, the non-accelerating inflation rate of unemployment (NAIRU) appears to be lower than most experts predicted. Average hourly earnings, which I have been watching closely, increased by a disappointing 0.2% in May, leaving the year-over-year increase at a stable 2.5%.



Disclosure Statement

This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

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Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

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