Displaying items by tag: rates

(New York)

Investors be warned, JP Morgan has just issued an ominous warning—that ten-year Treasury yields will jump to 5%. JP Morgan’s CEO, Jamie Dimon, has long argued that yields would rise to 4%, but now says the figure might be 5%. “I think rates should be 4 percent today … You better be prepared to deal with rates 5 percent or higher - it’s a higher probability than most people think”. Dimon sees a recession on the horizon, but he does admit there may be time for the bull market to continue, saying it could “actually go for 2 or 3 more years”.

FINSUM: Ten-year yields are currently having trouble sustaining 3%, so it is hard to imagine them going to 5% any time soon. Still we thought the warning was worth sharing.

(New York)

Those hoping the current turmoil in the technology sector may turn around the fate of gold will be upset by new data. Gold has suffered its worst start to a year in almost a decade despite the fact that the US equity market was in a correction for much of it. Now, economic data shows that demand for the shiny metal is at its lowest since 2009. The big drop in drop demand did not stem from industry, but instead from investment markets, with ETFs buying ~60% less gold in the last year than the year prior.

FINSUM: Gold is in a tough and interesting spot. On the one hand, it is easy to see why rising rates have depressed gold prices. But on the other, it seems gold have should have benefitted from all the geopolitical and market instability of this year.

(New York)

Are you looking for high yielding stocks that also appear to have good upside? Look no further than this handful of picks. Market Watch has picked a group of stocks with solid dividends that are also seeing dividend hikes. This is a key feature to have not only as a way of offsetting any losses from rising rates, but also a means to drive price appreciation. All the names on the list have dividends of over 4% and have seen recent dividend hikes of 10%+. These stocks include CareTrust REIT, Six Flags Entertainment, AbbVie Inc, and Janus Henderson Group.

FINSUM: Dividend hikes have been rarer lately than one would expect given the good spell of earnings we have had. The reason why seems to be the prevalence of buybacks. All of which makes these shares unique.

(Washington)

In what could come as very welcome news for investors across all asset classes, Fed Chief Powell has indicated that the Fed may take a break from hikes for a while. The question is when this pause in hikes will occur, and the Fed is debating this internally. The central is expected to introduce the words “for now” in regards to its plan for near-term hikes, a new phrase that signals conditionality. According to a former Fed economist, “Given that there’s no visible inflation threat -- not in the data and not in the FOMC forecasts -- it makes sense to inject conditionality on future moves”.

FINSUM: We hate analyzing Fed speak, but a pause in hikes seems like a good idea to us. With inflation low, there is no reason for the Fed to forcefully invert the yield curve and cause a recession.

(New York)

There has been a lot of consternation over markets this year, and with good reason. Between a trade war and rising rates, there has been a good deal to be nervous about. But in the last few weeks, something definitely changed, as exemplified by the Dow just recording its best month since January. Worries about the trade war have abated in the last couple of weeks, but the big question is whether recent gains are sustainable.

FINSUM: So on the question of sustainability of gains, big banks like Morgan Stanley, Citi, and Goldman Sachs have indicated this week that they think markets are destined for a near term correction. We aren’t so sure. We are suspicious of how prices have risen, but in this instance we are drawn to the old idea that markets love to climb a wall of worry.