FLGV News and Press, Franklin Liberty U.S. Treasury Bond From 01/28/23

Summary When the height of the entire Yield Curve is the 6-month Treasury Bill, you know that you are living in some very strange place. There are those that suggest that some kind of “pivot,” by the Fed is on the horizon. I am not in this camp, and do not expect to see th...

Summary U.S. equity indexes, having declined sharply in 2022, are fighting the Fed as 2023 begins. The inverted yield curve argues for recession, and equities appear to have discounted a significant probability of at least a mild recession. The bottom line is that, unlike the last f...

Summary Bond investors have started the new year on a very upbeat tone. They seem convinced that the battle against inflation has already been won. The Fed might nudge rates up a bit more to stay on the safe side, but soon enough we’ll go back to a world of very low interest rate...

Summary Stocks don’t bottom until central banks have slashed short rates enough to drop them back below long, re-steepening the curve to positive sloping once more. HY bond prices typically bottom with equities once HY yield spreads have reached 800+ bps above similar-term treasu...

Summary Market divergence between bulls and bears in 2023. Are markets listening to what central banks are saying about interest rates? Why perception may be worse than reality when it comes to market sentiment. There appear to be widely differing views on what 202...

Summary The US monetary tightening commenced in February of 2021 - the month that the US monetary inflation rate peaked at an extraordinary level of 40%. Within the Keynesian framework, the economy can be viewed as a bathtub filled with an amorphous liquid called “aggregate deman...

Summary Yield curve inversion has occurred ahead of every U.S. recession since the 1950s. Today, nearly every yield term spread has inverted. Several features of the current yield curve are sending a very strong recession signal. Several characteristics of the U.S. Treas...

Summary On a coincident basis, driven by a historically tight labour market and robust industrial production growth, the US economy remains deceptively strong despite negative real incomes and tight financial conditions. However, the leading indicators of the business cycle continue to ...

Summary Avoiding growth last year paid enormous dividends, but I didn’t predict that growth stocks would fall in 2022, just that I couldn’t own them and fulfill our fiduciary duty. Near-term stock market performance is negatively correlated with economic growth. Commod...

Summary 2022 was a bad year for most kinds of core investment assets, from the least-risky Treasury securities to the most volatile corners of the equity market. We expect there will be a recession in the US at some point in 2023, driven by a combination of cyclical factors. Bond yi...