After a substantive increase in the first months of 2018, real yields have slowly declined, a positive indicator for stock and bond markets, as they suggest lower true cost of debt for domestic companies. A bond yielding 4%, with inflation at 2%, has a real (inflation-adjusted) yield of 2%. Real yields can be seen as compensation investors receive for higher future growth rates, inflation volatility, and a potentially more active Federal Reserve (Fed). Indications of higher levels of growth and inflation, and thus a more aggressive Fed tightening schedule, led to a sharp rise in real yields in early 2018, which may have contributed to equity

The February 2018 market correction caught many investors off guard, but the longer-term trend remains higher. This year has provided more volatility than we’ve seen in recent years, with many wondering if the movement is a sign that the bull market is ending. Remember that when the market is finding its lowest point (the bottom), the process to get there can be quite frustrating and even confusing for investors. As a result, we acknowledge we are amidst the bottoming process, and we don’t think the bull market is ending, as longer-term technicals continue to look strong, along with sentiment flashing levels of worry seen at other

Producer and consumer prices moved higher in March, but both remain manageable. Inflation has been a major topic for financial markets in 2018, with concerns initially sparked by a January wage growth number that exceeded expectations. Wage growth cooled somewhat in February and March, though it currently stands at 2.7% year over year, which remains toward the top of its post-financial crisis range. While faster wage growth is a good thing for workers, wages are one of the largest expenses for employers; and a strong move higher could lead companies to pass higher wage expenses on to consumers, potentially fueling inflation and causing the Fe

Spreads across various sectors of fixed income are signaling that areas of recent stress are receding, a positive omen for bonds and stocks alike. Spreads can be generally defined as the difference between the yield of a security or index relative to another, lower-risk, comparable maturity security or index, and can be an indicator of market concern or optimism. For instance, if investors are enthused about economic conditions and believe default rates will be low moving forward, they will demand less of a premium (relative to very low risk assets like U.S. Treasuries) in order to take on the risk of lower-rated and higher-risk segments of f