The yield curve has continued to flatten; however, because rates are rising simultaneously, it is a less ominous indicator for the economy relative to if yields were falling. Here are two ways in which the yield curve can flatten:

A bear flattener is an environment in which rates rise across the yield curve, but short-term rates rise more so, leading to a flatter yield curve.

A bull flattener is an environment in which rates decline across the yield curve, with long-term rates declining more, also leading to a flatter yield curve.

The bull and bear distinction reflects whether the move is good or bad for bonds, th

There are several market myths related to certain market indicators which have the tendency to distract investors from what really matters in assessing market opportunities. We believe the overall fundamental backdrop is currently quite positive thanks to solid economic growth and strong corporate earnings trends, while market sentiment and technicals continue to suggest future equity strength. This week we will bust some common market myths.

Myth 1: The Yield Curve

The yield curve has flattened throughout 2018, causing some to fear that a recession may be right around the corner. This makes sense, as the past nine recessions

Beige Book Suggests Continued Moderate Economic Growth

The latest edition of the Federal Reserve’s (Fed) Beige Book, released Wednesday, April 18, 2018, sustained a positive view of the U.S. economy. The Beige Book is a qualitative assessment of the domestic economy and each of the 12 Fed districts individually. The report is prepared eight times per year, ahead of each Federal Open Market Committee (FOMC) meeting — the next of which is set to take place May 1 – 2, 2018. We believe the Beige Book is best interpreted by measuring how key words change over time. The qualitative inputs for the April 2018 Beige Book were coll

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