FLGV News and Press, Franklin Liberty U.S. Treasury Bond From 03/31/22

So the US curve has inverted, or at least in parts. We'll be a bit picky and assert that a 2/5yr inversion is the better predictor of recession; it has not inverted yet. The 2/5yr segment has not inverted just yet (but it will). The 5/10yr segment has inverted, partly as the 10yr is d...

Any inversion of a portion of the yield curve - as has just happened - is a negative long leading indicator, specifically for the period 12 to 24 months out. But the depth, duration, and breadth of the inversion are all important in assessing the weight to give the indicator. A one-da...

Inverted curves are a necessary but not sufficient condition for a recession. The yield curve inverts when the market senses that the Fed is so tight that the economy is at risk of collapsing, and that collapse would then prompt the Fed to ease. Low spreads mean the market thinks ...

The CRB commodity price index (39% fossil fuels and 41% agriculture) has leapt 25% since Russia invaded Ukraine on February 24th and is up 38% year-to-date. The cost of living shock is big amid negative real wage gains and a freakish jump in shelter expense over the past two years. ...

Market opinion about the balance of risks was transformed back in October, which not coincidentally happened to be when the flood of inventory began showing up. Neither the more pessimistic curved stance nor the buildup of inventory has changed since. From October 2021 inventories hav...

One factor likely having an outsized influence on the Federal Reserve’s interest policy is the current level of inflation. In an effort to curb some demand, at the conclusion of the Fed’s March 16 meeting, the Federal Reserve embarked on a path to increase interest rates...

The odds of a US economic contraction in the immediate future remain low, but blowback from the Ukraine war and elevated inflation risk could quickly change the calculus. Incoming data in the weeks ahead could be unusually critical inputs for deciding how or if to change the current l...

Most of the stocks we are adding now are prospering from the current inflationary environment that accelerated after Russia invaded Ukraine. As investors seek inflation hedges that can prosper from stagflation, stocks remain our best bet. Specifically, commodity-related companies - as...

At present, the simplest interest rate analysis states that rates are rising as the Fed finally moves to combat inflation. What if long rates do not stop rising as the U.S. economy slows? What if sovereign selling pressure in the bond market continues and increases in the months ahead...

The first rate hike since 2018 is behind us, and the bond market celebrated by pressing the yield curve closer to zero. The difference between the 2-year and 10-year note is now just 17 basis points. Total debt in the U.S. economy stands at $88.3 trillion and GDP is about $24 trillion...