FLGV News and Press, Franklin Liberty U.S. Treasury Bond From 09/16/21

Developed market yield curves are displaying late-cycle dynamics. This is nowhere as obvious as on the GBP curve as hikes are being brought forward, and as the curve flattens. This makes it all the more difficult for long-end rates to rise. For further details see: Rates...

The lower-than-expected CPI pushed US rates back into the driving seat, taking Bunds for a ride. We are also watching hawkish ECB risks that could potentially narrow the UST-Bund spread. We think such tightening is more likely to be temporary and is more inclined to follow the ECB...

In addition to battery element shortages, the chip shortage has limited electric vehicle production. At the auto show in Munich last week, several auto executives commented on the chip shortage. Overall, the electrification of vehicles may be characterized by perpetual shortages for y...

The ECB is looking through higher headline inflation and inflation swaps. We doubt these will be enough to change easing expectations in December, but hawkish comment risks will remain a threat to carry trades. In the US, inflation prints have not affected breakevens much in recen...

As the economy continues to recover, market participants will concentrate on two critical areas: the employment picture and policy decisions made by the Federal Reserve. The jobs picture and Fed decisions could create volatility for commodities, stocks and bonds in the months ahead. ...

The current slowdown was telegraphed by the bond market, and we’re now in the midst of it. There are any number of reasons to think the economy will just keep fading all the way back to the pre-COVID trend of about 2%. I don’t see any reason to believe we are near recess...

Treasury Secretary Janet Yellen said that the government will run out of money by the middle of October, sooner than expected, and that Congress needs to act pronto. With all the hyped-up performative bloviating about the debt ceiling, it’s easy to forget that raising the debt ...

A proposed $3.5T spending bill, with division among Democrats on size. Areas that are ripe for cutting down include some social spending like affordable housing. The debt ceiling issue is fast approaching, which will be another headwind to keep an eye on. Strategas' Washington Res...

The ECB reduced PEPP purchases without causing a hawkish reaction. Its secret? Fanning hopes of more easing in December. We think an acceleration of APP is now the market’s base case, thus putting carry traders in the driving seat. Core rates should tread water from here, u...

“Real” rates are the interest rates that an investor receives after adjusting for inflation - in this sense they are the “real” yield you receive from owning the asset. With economies still chugging along and yield-eating inflation rising, investors are pil...