By David O'Malley | September 25, 2017
The stock market held near record levels and interest rates were stable after the Federal Reserve (Fed) announced its much anticipated plan to shrink its balance sheet last week. Despite concerns about the impact of Fed interest rate increases on the long term economy and inflation outlook, the Fed took a constructive view of the dynamics impacting the economy. As a result of the relatively hawkish tone, the odds of a December rate hike increased. I still believe the Fed will hold off on increasing rates until 2018.
By David O'Malley | August 14, 2017
Geopolitical risks dominated headlines last week with the increasing escalation over North Korea’s nuclear weapons program stealing most of the spotlight. The war of words that has been simmering between the U.S. and North Korea bubbled over into markets. After making new highs, the S&P 500 fell 2% late in the week, marking the first significant sell off in several months.
By Penn Mutual Asset Management | August 9, 2017
Penn Mutual Asset Management CIO Mark Heppenstall contributed an article to The Hill where he discusses the current gridlock in Washington, the “new normal” economic environment and investment trends amid low volatility. Mark anticipates all these factors will extend the credit cycle into extra innings and enable the Fed to be patient with future rate hikes.
By David O'Malley | August 7, 2017
Last week’s employment data confirmed the strength of the jobs market with 209,000 new jobs added during July versus an expected 180,000. The unemployment rate fell to a cyclical low of 4.3% while hourly earnings increased by 0.3% to a 2.5% year-over-year rate.
By David O'Malley | July 31, 2017
Last week saw strong corporate earnings and continued growth in the U.S. economy. U.S. GDP for the second quarter was 2.6% according to the Bureau of Economic Analysis’ advanced estimate. The strength in the economy was driven by robust business investments for the quarter. Further, the failure of the Republican plan to repeal and/or replace the Affordable Care Act drove headlines last 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.
By Scott Ellis | July 20, 2017
Many investors are struggling to find attractive investment opportunities in today’s environment. One can choose from waiting on the sidelines in cash, investing in government bonds (10-year U.S. Treasuries 2.3%), investment grade bonds (+105 basis points (bps) in the U.S.), high yield bonds (+439 bps in the U.S.) or equities (S&P 500 Index is up ~10% year-to-date) and other more esoteric and less liquid investments such as private equity, venture capital and real estate. Central bankers around the world have been using their balance sheets to buy the most liquid and least risky investments, and as a result, bringing the yields down significantly. Because of this, investors have been moving further down the risk spectrum in hopes of attaining the same returns they once were able to achieve. The central bankers’ actions have left other investors to fight for the remaining investable assets.
By David O'Malley | July 17, 2017
Second quarter earnings will receive significant attention this week, as stocks pushed to new highs on the S&P 500 Index last week. Expectations for solid earnings reports have been growing over the past few weeks and are necessary to keep stocks grinding higher.
By Mark Heppenstall | July 13, 2017
The Misery Index, developed in the 1960s by Yale University economist Arthur Okun, has been a widely followed measure of national economic performance. The Index is calculated by simply adding together the trailing 12-month inflation rate and current unemployment rate. This week’s chart shows a 70-year history of the Misery Index in the U.S.
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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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