Asset Allocation Reports
Asset Allocation Weekly (December 1, 2017)
by Asset Allocation Committee Given the length of the current expansion, there is growing concern about the economy’s ability to avoid recession. So far, none of our indicators suggests the economy is near a downturn. Of all the indicators we monitor, the yield curve is the most reliable; however, there are potentially dozens of iterations of… Read More »
Asset Allocation Weekly (November 17, 2017)
by Asset Allocation Committee [Ed note: We will not publish an Asset Allocation Weekly Comment the week of November 24. The next comment will be published December 1.] Over the past three weeks, we have seen a rise in the yields on high-yield bonds. The Merrill Lynch High Yield bond effective index is up 40 bps… Read More »
Asset Allocation Weekly (November 10, 2017)
by Asset Allocation Committee Last week, we discussed our views of the debt markets. However, one item we didn’t examine was the dynamics of the yield curve. The U.S. Treasury market has both a domestic and an international component. While all sovereign debt markets have a domestic component, the international component is especially a factor for… Read More »
Asset Allocation Weekly (November 3, 2017)
by Asset Allocation Committee The 10-year Treasury yield has recently been trending upward. Since early September, yields have risen from 2.06% to 2.46%. What’s behind this rise and do we expect it to continue? We use our 10-year T-note model for guidance. It estimates the fair value level of the 10-year T-note yield based on the… Read More »
Asset Allocation Weekly (October 27, 2017)
by Asset Allocation Committee It is expected that over the next two weeks President Trump is going to appoint a new Federal Reserve Open Market Committee (FOMC) chair and vice chair. In this report, we will build scenarios of how policy could change depending upon whom the president appoints. This spreadsheet details our estimate of policy… Read More »
Asset Allocation Quarterly (Fourth Quarter 2017)
Our inflation outlook remains benign and economic data continues to be modestly positive. We do not anticipate a recession in the near term. Though the composition of the Fed will change over the next four months, we expect policy to continue toward tightening through increases in the fed funds rate and a reduction in the… Read More »
Asset Allocation Weekly (October 20, 2017)
by Asset Allocation Committee The Financial Accounts of the United States (formerly known as the Flow of Funds Report) is published by the Federal Reserve and provides data on the level of financial assets and liabilities by sector. Using this data, we can approximate the average asset allocation of American households over different periods. This accounting… Read More »
Asset Allocation Weekly (October 13, 2017)
by Asset Allocation Committee With the S&P making new highs almost daily, it is probably a good time to look at long-term trends to build some parameters. This is a simple trend chart of the S&P 500 Index. We have log-transformed the weekly Friday closes of the index data and regressed it against a time trend. … Read More »
Asset Allocation Weekly (October 6, 2017)
by Asset Allocation Committee The latest FOMC meeting and subsequent comments from Chair Yellen have increased the likelihood of a December rate hike. This chart shows the implied likelihood of a rate hike compared to steady policy from fed funds futures for the December meeting. In early December, the projected odds of a hike were just… Read More »