(Washington)

In may seem like an eternity in market terms, but 2021 is right around the corner if you are a regulator. The DOL is reportedly racing to get a new DOL rule finalized and implemented before a new administration may takeover in January 2021. The DOL is reportedly set to release a new version of its signature rule this December. But even if it does so, experts say it will a tight push to get a rule implemented before a new administration might take over. In fact, many say the DOL will need to debut its proposal for the new rule by October in order to achieve the January 2021 deadline.

FINSUM: So we know this rule is supposed to be “harmonized” with the SEC’s rule, but there is preciously little additional information. We do think the tight timeline will push the department (which has a new chief after Acosta resigned) to issue a rule more quickly than most in our industry probably realized.

(San Francisco)

Bad news for tech investors and Silicon Valley executives—it looks like Big Tech is going to bear the brunt of the trade war. The group of stocks surged yesterday on the announcement of the delay of tariffs on China. This is because a major part of the tariffs relates to hardware that is core to technology companies’ products. Most specifically, the Treasury said it would delay tariffs until December 15th on “cellphones, laptop computers, videogame consoles, certain toys, computer monitors, and certain items of footwear and clothing”.

FINSUM: While this development offers some relief, it will likely be fleeting. The trade war with China is looking increasingly intractable and tech is right in the middle of it.

(New York)

The yield curve is sending increasing warnings that a recession is coming. While the three-month and ten-year yield has been inverted for months, a new inversion occurred yesterday, when the ten-year yield moved below the two-year yield. Even more eye-opening was that the 30-year bond yield fell to just 2.06%. That figure shows that investors have abandoned all fear of rising rates and all economic bullishness.

FINSUM: We don’t know whether to be more worried about a big correction in bonds, or that the economy may actually be as bad as bonds are suggesting! Either way things look bad.

(New York)

The markets nosedived again today as recession fears are spiking amongst investors globally. While US investors got a bit of a reprieve from the trade war due to the announcement that new tariffs had been delayed, bad economic data out of Germany and China made a global recession look more likely. The big selloff not only dragged US bonds into a 2/10-year inversion, but also inverted the UK yield curve for the first time since 2008. German bonds saw yields fall to a record low (in negative yield territory).

FINSUM: The doom and gloom is warranted given the current backdrop, but it is also not unreasonable to think the current “wall of worry” is the perfect mountain for this bull market to climb.

(New York)

The US’ leading bond manager has just made a bold call. Pimco thinks that US bond yields will follow Europe and go negative. Speaking about the market situation more broadly, Pimco says “The next several years could be the exact opposite of what we saw in the past five to 10 years … That was high returns on financial assets and low volatility. That will be turned upside down”. Pimco is particularly concerned about a recession, believing it would send yields sharply lower. However, that is no sure bet, because if the trade war gets sorted out sooner than expected, yields would likely move higher quickly.

FINSUM: Yields moving lower seems to be the path of least resistance, so we think that is the direction that bonds will trend.