The H Group Blog

Investment and Financial Planning news from some of the best in the business.

Weekly Review - April 11, 2016

Guest Post - Monday, April 11, 2016

Summary

  • In a relatively quiet week for economic data, ISM services showed further improvement into expansionary territory, and some jobs data offered a decent showing, with lower claims and stronger hiring and quits activity in the governments JOLTs report.
  • Equity prices generally fell globally with sentiment for economic growth declining a bit. Bonds rallied upon lower interest rates. Commodities gained, with oil leading the charge as a result of lower inventories.
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Weekly Review - April 4, 2016

Guest Post - Monday, April 04, 2016

Summary

  • Economic data for the week was highlighted by a turnaround in manufacturing, decent housing reports and a generally positive but uneventful employment situation report.
  • Equity markets gained on the week with decent economic data, while bonds also performed well along with a drop in interest rates. Commodities fell on the week as oil supply concerns again rose to the forefront.
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Weekly Review - March 28, 2016

Guest Post - Monday, March 28, 2016

Summary

  • A slow week for economic releases included a slowing in durable goods orders, mixed housing data, and GDP for the 4th quarter of last year that was revised upward slightly from an earlier estimate.
  • Equity markets declined globally as a result of the Belgian terrorist attacks and lower energy prices, while bonds were little changed due to minimal changes in yields during the week. Oil prices fell a few dollars from the prior week.
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Question of the Week - March 28, 2016

Guest Post - Monday, March 28, 2016

In a low yield environment, many investors have been drawn to high-income strategies. What are the risks?

Investment strategies claiming high yields are intuitively appealing to investors, mostly due to the behavioral tendency of large payouts acting as 'a bird in the hand' being worth more than 'two in the bush,' and implying mixed feelings about using total return for portfolio drawdowns. Particularly in an environment of low yields for safe assets like savings accounts, CD's and money market mutual funds, higher yield options have been in strong demand. There's a bit of anchoring here as well, as high yields for certain investments are often compared in relative terms to rates for CD's or government bonds, which provides part of the story, but certainly not all of it.

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Weekly Review - March 21, 2016

Guest Post - Monday, March 21, 2016

Summary

  • Economic news was led by the Fed's decision to hold back on any rate changes, while sounding a bit more dovish than in recent meetings. Manufacturing activity has bounced back somewhat, seen through better survey results. Inflation remains muted, although signs of some increases are apparent at the core level, while housing results were mixed.
  • Equity markets gained on the week with interest rate pressures lessened and an improvement in manufacturing data, which had been weak as of late. Bonds also performed well upon the move lower in interest rates. Oil continued to recover with a decent gain on the week, pushing commodity indexes higher.
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Weekly Review - March 14, 2016

Guest Post - Monday, March 14, 2016

Summary

  • In a slow week for meaningful economic data, the few reports that did surface showed a bit of small business pessimism, some inventory build-up, perhaps some benefit of a flattening U.S. dollar and strength in consumer mortgage demand.
  • Equity markets experienced gains on the week, mostly due to positive sentiment as a result of the European Central Bank's decision to lower interest rates further and add to monetary easing efforts. Bonds were mixed as interest rates ticked higher in the U.S., although credit saw gains with additional price recovery in crude oil markets.
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Weekly Review - March 7, 2016

Guest Post - Monday, March 07, 2016

Summary

  • Economic data was mixed to better on the week, with manufacturing ISM a bit stronger, yet several measures remained in contractionary territory. Services looked stronger, including construction, as did Friday's employment report.
  • Equity markets experienced positive results as oil pushed higher, and decent economic numbers resulted in interest rates also moving upward, punishing fixed income markets.
 Read Entire Article Here

Question of the Week - February 29, 2016

Guest Post - Monday, February 29, 2016

What's with all the negative interest rate talk again?

We brought up the topic of negative yields a year ago, when bond yields in Switzerland fell below zero, followed by a similar occurrence in several other European fixed income markets. The first type of negative yield concerned secondary market bonds, where underlying prices moved high enough over par to push the yields-to-maturity so low (remember the teeter-totter of yields and prices having an inverse relationship) that these actually dipped below zero. How this works is, while the actual stated bond coupon interest rate can still be positive, a negative YTM number guarantees a loss on the bonds when they're held to maturity after both interest and price change (price depreciation in that particular case) are added together. The only time such a position makes sense is if, as a shorter-term trade, one thinks rates could go even more negative (moving bond prices higher), there exists a lack of other options for large flows seeking 'safe' assets, or one is compelled to own a certain amount of sovereign bonds due to an investment mandate—such as those held by governments, pension plans, etc. But, based on standard economics, it doesn't make much sense. Nevertheless, almost a third of government debt globally is now trading at negative yields, surprisingly enough.

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Weekly Review - February 29, 2016

Guest Post - Monday, February 29, 2016

Summary

  • Economic data for the week came in stronger than expected in areas such as durable goods, personal income/spending, home prices, jobless claims and an upward revision to last quarter's GDP; consumer sentiment measures were mixed.
  • Equity markets rose in the U.S. as economic data outweighed the global growth concerns of recent weeks; foreign stocks rose as well, with an effect tempered by a stronger dollar. Bonds were flat on the week with minimal moves in interest rates. Oil prices ticked upward as talk of a production cut by major global producers subsided.
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Weekly Review - February 22, 2016

Guest Post - Monday, February 22, 2016

Summary

  • Economic data on the manufacturing side showed some improvement over the prior month, although several key metrics remained in the negative. Housing numbers released were weaker than expected, although weather could have played a role. Inflation figures were slightly higher than expected, showing strength in the non-energy side, although conditions remain tempered overall.
  • Equity markets recovered globally, while the higher inflation numbers caused bond yields to tick slightly higher. Oil prices experienced some stabilization as several nations discussed the idea of production cuts.
 Read Entire Article Here

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