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Wednesday, September 16, 2009

Fixed Income Recap


Yields were higher for second day in a row on strength in equities and comments from Fed Chairman Bernanke that the recession is likely over. The curve was slightly steeper as the longer end underperformed and 10- year TIPS breakevens widened a few beeps to finish at +183.7 bps.

The comment of the day award goes to Vince Reinhart from the American Enterprise Institute. "June was mostly likely the trough. Growth will be positive in the third quarter… All that tells you is that market economies do not stay in free fall. That doesn't tell you that we have a durable expansion in motion, it doesn't tell you growth is assured in 2010 and it doesn't tell you that the unemployment rate goes down." Reinhart isn’t the only one sharing views like this. The stock rally is being heralded as the precursor to an economic recovery, but as Peter Lazaroff wrote in his letter yesterday, stocks look pretty rich from a valuation standpoint.

CPI is the big news release today, just now coming in at +.4% MoM - +.1% ex food and energy. More on this tomorrow.


Cliff J. Reynolds Jr., Investment Analyst

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