U.S. Dollar

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30-Year Swap Spreads Get a Boost Wider from Capital Relief

By John Swarr | July 6, 2017

Second quarter U.S. dollar (USD) interest rate markets were very unexciting when looking at absolute movements in both swap rates and Treasury yields. However, an interesting development arose concerning the relative movement between the 30-year points of these two curves that will likely have the attention of market participants through the end of the year. The 30-year swap spread – defined as the difference between the 30-year swap rate and 30-year Treasury yield – has widened (or become less negative) significantly since June 13th, when the Treasury released its recommendations for financial industry reform, including a proposal to remove U.S. Treasuries (USTs) from the denominator of the supplementary leverage ratio (SLR) calculation. This proposal would effectively make USTs “cheaper” for banks to hold from a capital requirement perspective.

2017: A Year of Market and Economic Uncertainty

By David O'Malley | January 9, 2017

2017 began with significant uncertainty surrounding the implications of the major geopolitical changes that happened during 2016. In the next few weeks, we will learn more from the British Prime Minister on the process to withdraw from the European Union. On January 20th, Donald Trump will be sworn in as the next President of the United States. The impact of these two changes in the global environment will most likely drive the course of markets during the year ahead.

Stocks Rally on Fed and Economy

By David O'Malley | November 23, 2015

The economic data for the week continued to be solid as unemployment claims fell to 271,000. This data reinforced the market’s view that the U.S. employment conditions continue to improve.

Strong October Employment Number Signals Fed Rate Increase in December

By David O'Malley | November 9, 2015

I have written in the past that increasing wages would be a key indicator for the Fed to start increasing rates. The 0.4% increase in average hourly earnings this past month resulted in the highest year-over-year increase in the past twelve months.

“More Sellers than Buyers?”

By David O'Malley | November 2, 2015

Market action this past week has been primarily driven by the reaction to the Federal Reserve’s (Fed) more hawkish statement last Wednesday and the softer economic data released.

Market Dynamics Are Changing. Caution Ahead!

By Zhiwei Ren | May 28, 2015

Over the last five years we have seen one of the greatest bull markets in history. However, all good things come to an end; recent market dynamics are showing signs that regime is slowly changing.

Definitive Direction on Economy Remains Elusive, but This Week May Tell

By David O'Malley | April 13, 2015

Last week’s economic data, Fed minutes and New York Fed President William Dudley’s comments only added to the questions surrounding the strength of the economy and the timing of any increase in interest rates.

A Pause in the Dollar Bull Market

By Zhiwei Ren | March 26, 2015

The DXY Index is the benchmark for the U.S. Dollar and since last June, it has rallied more than 20%.

Will the Strong Employment Number Change the Fed’s Timing?

By David O'Malley | March 9, 2015

The markets reacted sharply on Friday to the stronger than expected payroll number, with stocks selling off, bond yields rising and the U.S. dollar strengthening.

The Fed: “Hawkish,” “Dovish,” or Both?

By David O'Malley | March 2, 2015

Last week’s congressional testimony from Federal Reserve Chairperson Janet Yellen has led to a debate among market participants about whether her comments were “hawkish” or “dovish” and when interest rates will rise.



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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