Although the number of acres burned, and structures damaged from CA wildfires has decreased from 2020 when 4.3 mlln acres burned and resulted in approximately 20 billion dollars of damage. The more recent fires are closer to populated areas and have resulted in much more significant monetary losses, estimates are over 200 blln dollars. As […]
With goods inflation falling quickly and the price of oil approaching 60 dollars a barrel, inflation seemingly is no longer a threat and the Fed’s new focus is jobs. Job growth is definitely slowing. To put things in perspective, from 2010 to 2019, the US economy added approximately 150 thousand new jobs per month. Over […]
Fed officials will likely cut rates again on Wednesday, moving the Fed Funds rate to a range between 4.25 and 4.50. We think the Fed wants to get this rate between 4.00 and 4.25, but with inflation turning up, the timing of their next move may be in question. Perhaps a long pause is warranted. […]
The current Federal Funds rate is 5.375. This is up from .125 in March of 2022. In short, the Fed pays financial institutions this rate on their cash balances and thus it serves as the benchmark for all highly rated money market yields, including short T Bills. The Federal Reserve has indicated that their fight […]
Our clients have been heavily invested in US T Bills at yields north of 5%. We continue to believe this is a good place to be invested until we have a better picture of US inflation and the Fed’s future interest rate plan. Complicating matters are the Debt Ceiling limits and China/Russia’s expansionary tendencies. Both […]
We believe that wage and commodity inflation will remain sticky, and the Fed will continue to tighten rates to at least 5.25%. The curve is steeply inverted, and the markets believe that the Fed will start easing in the second half the year (we are not so sure). Six moth T Bills yield close to […]
Here are the 2022 returns and closing yields for these Bloomberg Bond Indices. As you can see, every Index was down, and longer duration Indices were down the most. The average ASA client returned a positive 1.39% net in 2022.
Inflation data this week will likely support the Fed’s view that rates need to go higher for longer. We see Fed Funds hitting 5.25% by March next year (currently 4%). The market has similar views. One year T Bills are trading at 4.80, which is close to a fair projection of the average Fed Funds […]
This week, Fed Chairman Powell reiterated the Board’s commitment to flight inflation. In addition to the Chairman, a number of other Board members independently spoke to the same tune and their tune is all pointing to higher Fed Funds rates sooner and for longer. The markets are now pricing a 75 bpt hike on 9/21 […]
In ‘normal’ times, Municipal bonds provide our clients with a much better after tax return than US Treasury Bills. These are not normal times, so lets dig into the details. Let’s assume that most of our clients are in the highest marginal Federal tax bracket of 37% and many pay the 3.8% NIIT. For our […]