Yield curve

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Stocks Make a New High

By David O'Malley | September 18, 2017

The S&P 500 closed above the 2,500 mark for the first time on Friday. The markets ended a strong week of gains driven by continued favorable conditions for economic growth and the prospects for potentially bipartisan action coming out of Washington.

Hurricane Recovery and Economic Impact

By David O'Malley | September 11, 2017

The one-two punch of Hurricanes Harvey and Irma has impacted so many in Texas, Florida and throughout the Southern part of the U.S. We keep all of those impacted in our thoughts and wish them a speedy recovery.
Markets will be looking at how these two storms will impact the economy both in the near term and farther down the line. In the short term, the potential is for the storms to put downward pressure on economic performance and distort statistics (like the rise in unemployment claims last week), but the rebuilding process will be a boost to the economy.

Unexpectedly Weak Employment Report

By David O'Malley | September 5, 2017

The nuclear test by North Korea has brought geopolitical uncertainty to a new level. As I have previously written, it is very hard to trade geopolitical risk so I prefer to stay focused on fundamentals.

Last week’s August employment report was weaker than expectations on almost all aspects. The report comes after stronger employment data earlier in the week. The ramifications of the weaker report bring the odds of a December interest rate increase by the Federal Reserve (Fed) to less than 50/50. The weaker average hourly earnings and sluggish inflation data may keep the Fed on hold until after the holiday spending season.

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.

Political Uncertainties and Resilient Markets

By Zhiwei Ren | February 23, 2017

The first two months of 2016 were challenging times. Global risk assets, especially commodities, were in a free fall and the market was pricing in a global recession and possible hard landing in China. Compared to 2016, the 2017 financial market is having a great start, with all major risk assets performing well year-to-date. The S&P 500 Index has not seen a 1% drop in over 90 trading days, and 3-month realized volatility has not been this low since 1995.

Yield-Hungry Investors Facing a Conundrum

By James Faunce | February 2, 2017

Institutional yield buyers in the fixed income credit markets have been waiting a long time for Treasury rates and absolute yields to increase. Since rates hit lows last summer, it appeared that the move higher in yields was finally going to materialize, particularly following the election results in which 10- and 30-year Treasury rates rose almost 80 basis points (bps). However, the very strong tightening in credit spreads has flattened the industrial credit curve quite substantially. As a result, despite the back-up in long Treasury rates, the all-in yield for long industrial credit has been largely offset.

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.

Yuan Devaluation Surprises Market

By David O'Malley | August 17, 2015

Last week’s surprise announcement from the Chinese government devaluing the Yuan affected markets across the globe.

Capital and Bond Market Outlook (2015)

By David O'Malley | January 14, 2015

Penn Mutual Asset Management’s outlook for stock and credit markets is cautious as we enter 2015.