Weekly Market Outlook

To the market’s surprise, the FOMC’s latest statement on monetary policy did not increase the likelihood of a September rate hike. Once again, specificity about what might trigger a rate hike was lacking.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Matthew Circosta
Date: June 18, 2015
Not only does the fed funds futures contract assign a 93% probability to hiking of fed funds at the September 17 FOMC meeting, but nearly 85% of roughly 50 Blue Chip forecasters expect a hiking of fed funds by the end of September.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Faraz Syed, Emily Dabbs
Date: June 11, 2015

The latest climb by bond yields reinforces the widespread downgrading of economic growth forecasts. As inferred from late May’s consensus forecast of quarterly growth rates, real GDP’s annual growth rate is likely to slow from 2014’s 2.4% to 2.2% in 2015.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, 
Matthew Circosta, Emily Dabbs
Date: June 4, 2015

Reference often is made to how the high-grade bond market was crushed in 1994. All too often, however, the bond market’s solid recovery of 1995 goes unmentioned. Basically, 1995’s drop by bond yields was in response to a slowdown by business activity stemming from 1994’s fundamentally excessive climb by borrowing costs.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Faraz Syed
Date: May 28, 2015

Mediocre best describes the current state of business activity. The recent high yield bond spread of 451 bp very much heeds the subpar and risk-laden tone of expenditures.


Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Faraz Syed
Date: May 21, 2015
The latest upturn by Treasury bond yields diminishes prospects for the real economy and reinforces a benign outlook for price inflation, mostly because the Treasury bond market has downplayed the importance of slower-than-expected economic activity.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Emily Dabbs
Date: May 14, 2015
The second-quarter-to-date’s 27 bp climb by the 10-year Treasury yield to 2.20% has yet to materially worsen prospects for corporate credit quality. Much to the contrary, high yield corporate bonds have largely shrugged off the ascent by Treasury bond yields.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Alaistair Chan, Faraz Syed
Date: May 7, 2015
Recently markets discovered that there was only a limited speculative demand for 10-year European government bonds yielding less than 1%. Unless forced to do so by an investment mandate, it’s highly unlikely that many long-term investors had been loading up on European government debt yielding less than 1%.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Emily Dabbs
Date: April 30, 2015
Yes, once the inevitable expiry of the Fed’s 0% interest rate policy impends, Treasury bond yields will rise and equity prices will deflate.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Matthew Circosta
Date: April 23, 2015
In this outlook we discuss how, for the US and many other advanced economies, the macro backdrop facing credit is unlikely to resemble anything from the post-war epoch.

Authors: David W. Munves, John Lonski, Lisa Hintz, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Faraz Syed
Date: April 16, 2015
In this outlook, we are able to observe the performance of the economy for an extended period after the severe recession and financial crisis of 2008-2009, and the results are decidedly lackluster.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Matthew Circosta, Faraz Syed
Date: April 2, 2015
In this outlook we look at which aggregate measure of financial leverage for US corporations best predicts or explains default risk.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Faraz Syed
Date: April 9, 2015
In this outlook we consider lackluster revenue growth, as it now raises eyebrows with first-quarter 2015’s deceleration by business sales extending well beyond energy products.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell, Faraz Syed
Date: March 26, 2015
In this outlook we examine the effect of the US dollar on pricing power as it has soared higher by a cumulative 29% against a basket of major foreign currencies since bottoming in the summer of 2011.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Matthew Circosta, Katrina Ell, Dana Gordon
Date: March 12, 2015
This outlook looks at the deceleration by emerging market activity and its consistency with industrial metals price deflation.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Katrina Ell
Date: March 19, 2015
Though the 10-year Treasury yield jumped up from February 2015’s month-long average of 1.97% to a recent 2.12%, higher Treasury bond yields may not be largely the offshoot of more strongly held expectations of Fed rate hikes.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Alaistair Chan, Dana Gordon
Date: March 5, 2015
In this week's outlook we consider the market value of US common stock being at its highest level relative to estimated pretax profits from current production, or core profits, since 2007’s final quarter.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Alaistair Chan, Tu Packard, Dana Gordon
Date: February 5, 2015
In this week's outlook we analyze how a wider US trade gap will help to more fully utilize the under-employed resources of the rest of the world.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Matthew Circosta, Syed Faraz, Dana Gordon
Date: February 26, 2015
In this outlook we look at the fear that expectations of faster real economic growth for 2015 is largely predicated on consumers’ positive response to attractively priced merchandise, where the downward pressure on product prices threatens to squeeze profit margins.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Alaistair Chan, Dana Gordon
Date: January 29, 2015
In this week's outlook, we examine how deflation fears have waned considerably and in turn, high yield bonds have thrived, while Treasuries have suffered.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Alaistair Chan, Dana Gordon
Date: February 12, 2015
In this week's outlook we examine how historically low global interest rates have fueled strong volumes of corporate debt issuance so far in 2015, keeping pace with the robust totals of last year.

Authors: David W. Munves, John Lonski, Ben Garber, Njundu Sanneh, Yukyung Choi, Irina Baron, Franklin Kim, Xian (Peter) Li, Zach Witton, Glenn Levine, Syed Faraz, Dana Gordon
Date: February 19, 2015
Print