FTSD News and Press, Franklin Liberty Short Duration U.S. Government From 01/24/23

Summary Once the ebbing omicron wave allows Chinese citizens to feel comfortable again about social engagement, we should see a decent bounce in consumption, even property transactions, and business investment will be momentarily buoyed. Inflation remains the greatest threat to the glob...

Summary When focusing on what we believe are the primary market signals, the “condition our condition is in” is uncertain. Quality is an increasingly important risk factor as investors refocus on fundamentals during uncertain times. U.S. small-cap stocks may have alrea...

Summary For several months, we have said that a slowing of inflation could provide a temporary tailwind to equity markets, but that weakening growth will eventually hit them with a stronger headwind. Tumbling PPI suggests that companies are starting to struggle to pass on rising costs. ...

Summary The causes of inflation were many and varied, always debated with plenty of finger pointing. Shorter-term shocks seem to cause people less concern because they don’t expect them to continue. Our current view is that the Fed will aim for a 5% or so federal funds target...

Summary Everyone wants to buy bonds right now because everyone knows the US is headed for recession. But neither the 10-year, the 2-year or shorter-term yields are currently falling at a pace that we would expect just prior to recession. If we go into recession you’ll make mo...

Summary The past week saw some of the strongest selling pressure in over a month, but buyers stepped in at the end of the week to arrest the decline, painting a weekly bar with a long lower tail. This is one of the classic signs of potential accumulation/buying pressure. Overall, the we...

Summary Central banker prudence and inflation-fighting resolve should err on the side of not conveying a rapidly concluding tightening cycle. Financial conditions almost immediately began to loosen globally, a loosening that has gathered important momentum early in 2023. Systemic ri...

Summary Investors are counting on inflation melting away by the summer. However, easing financial conditions and a weaker dollar are breathing life back into inflation. Commodities and import prices are just two reasons why inflation may come back sooner than you think. ...

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 Amid speculation that the US could be slipping into a recession, upcoming flash PMI data will be eagerly assessed to gauge the business climate in the opening month of the year. The surveys from S&P Global have been sending especially weak signals for output and demand growt...