IVOL News and Press, Quadratic Interest Rate Volatility and Inflation Hedge From 09/20/21

We remain pro-risk and opt to look through any short-lived volatility that could result from a battle over lifting the U.S. debt limit and funding the government. U.S. consumer price increases slowed in August, but inflation pressure has broadened to core items less affected by the pa...

Regardless of what happens with the economy and bonds over the rest of the year, we are nearing peak exuberance in stocks. Most people fear that a slowing economy will be the trigger for a stock market selloff, but that may be the wrong worry. Bear markets are generally associated wit...

The language being using to describe this market is "frustrating, but not fatal." The headline indexes have continued to grind higher, but this is a market that has been correcting, consolidating, and churning under the surface for most of the summer. The idea of an economic “g...

How to achieve a respectable income without taking on too much risk. What's the right risk/yield trade-off for reasonable income? Will '80s-style inflation return? For further details see: The Great Fixed Income Challenge: Balancing Yield And Risk In A Low-Rate World

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...

Interest rates are an opportunity cost of holding assets. Lower interest rates generally increase asset prices but this is dependent on the information content of interest rate changes. Risk-on asset prices generally increase as interest rates decline, except when interest rates are e...

SCHP provides risk-on exposure to US Treasury inflation-protected securities. The fund’s goal is to track the total return of an index by investing in US fixed income markets. One of a group of inflation hedging ETF all-stars. Any investment decision is likely to be acc...