Sentences with phrase «tightening cycles»

Tightening cycles almost always end with a bang.

In this follow up note, we focus our attention on the shape of the yield curve and returns over various tightening cycles.

One more note: I believe gradualism is almost required in Fed tightening cycles in the present environment — a lot more lending, financing, and derivatives trading gears off of short rates like three - month LIBOR, which correlates tightly with fed funds.

Interest rate - hiking cycles were measured by Fed tightening cycles.

However, the index had positive cumulative returns (2.64 % and 63.66 %) during the other two tightening cycles, during which rate increases were fairly steady over time.

Fed tightening cycles often end with a large explosion, where a large levered asset class that was better financed, was not financed well - enough.

Fed tightening cycles often start with a small explosion where short - dated financing for thinly capitalized speculators evaporates, because of the anticipation of higher financing rates.

It is my contention that the slope of the yield curve changes relatively consistently through loosening and tightening cycles.

As shown by the slope changes in the table, flatter curves have been characteristic of tightening cycles and steeper curves have resulted from easing cycles.

This turns out to be a very common occurrence during Fed tightening cycles.

High dividend stocks and exchange - traded funds are often thought to be vulnerable when the Federal Reserve embarks upon rate tightening cycles.

Note, however, that in each of the past three Fed tightening cycles, stable value fund returns continued to outpace money market fund returns.

Being but a curious and doubting slob, this time I took the time to look at each of the 15 tightening cycles since 1954.

One more note: I believe gradualism is almost required in Fed tightening cycles in the present environment — a lot more lending, financing, and derivatives trading gears off of short rates like three - month LIBOR, which correlates tightly with fed funds.

This has been one of the slowest tightening cycles on record.

That would be a relatively low level by historical standards; in the past two tightening cycles by the Fed, the federal funds rate peaked at around 6 per cent.

After increasing their policy rates by 125 basis points and 150 basis points respectively in the current cycle, market participants expect that the tightening cycles in both the UK and New Zealand are close to an end, although in both cases, recent inflation data have caused some participants to revise that assessment.

Previous tightening cycles — for instance, the mid-1980s energy bust and the bursting dot - com bubble in the late - 1990s — rolled through the economy over five years or so.

The pace of tightening currently priced in by the market is very moderate compared with the experience in past tightening cycles.

«Remember, Fed tightening cycles start off benign but 10 of the 13 in the post-WWII era have ended in tears.»

Also, bills have typically traded below other money market rates during tightening cycles, as they do now; periods where bills trade at or above other rates have been the exception and not the rule.36 Thus, the smaller increase in bill yields than in rates on other term instruments is not surprising, and I do not read it as undermining the general conclusion that the policy rate increase was effective in firming money market conditions.37

But he also points out that 10 of the 13 postwar Fed tightening cycles have ended in unexpected recessions.

The Fed embarked on its first tightening cycle in more than a decade in December 2015.

The somewhat stronger U.S. inflation signal implies a modestly more hawkish U.S. Federal Reserve tightening cycle than what we would expect to see out of the Bank of Canada (BoC) after it left its key overnight lending rate unchanged at 1 % this month.

Rather than a traditional offsetting relationship at this early point of the tightening cycle, the near - term interest rate outlook and the near - term profits outlook are both negative.

The last time a Liberal government entered an election in the middle of a monetary policy tightening cycle was in 2006; that year, the Conservatives defeated them.

The question lingering on investors» minds is how many rate increases the central bank intends to implement until the end of the tightening cycle, and if it was willing to raise rates above it its so - called neutral rate.

You could make the argument while their was less short - term volatility at the time, the greater long term systemic instability occurred after after the late 90's and 04 - 2006 tightening cycle.

It did this in five steps over three years — two in mid 2002, two in late 2003 and one in early 2005 — a more gradual tightening cycle than normal.

But if valuations had been rising in the previous year, the S&P 500 has historically performed much worse following the start of a tightening cycle.

Regardless of the period, 3 - month returns following the start of a period of steady tightening were on average negative and more volatile, as markets initially reacted negatively to the start of a tightening cycle.

Fed has hiked 14 times and 10 yr rates are unchanged while 30 yr rates are 60bp lower than at the beginning of the tightening cycle.

«By the time 10 - year and 2 - year Treasuries reach parity, as is almost the case now, the economy is typically slowing and the Fed is at or near the end of its tightening cycle.»

But this unexpectedly sanguine report was a reminder that the beginning of a Fed tightening cycle could be near, and the subsequent selloff is a clear sign that the U.S. market is vulnerable to higher volatility in the near term, even though we like the long - term prospects of stocks.

The pace of rate increases has picked up since the central bank began its tightening cycle in December 2015.

Although the US currency typically weakens at the start of a tightening cycle, Morgan Stanley is forecasting a stronger greenback against all major currencies through 2017.

Historically, that would still mark the slowest US tightening cycle ever.

«Having learned its lesson, the Fed is trying to convince markets that getting off zero is not necessarily the start of a traditional policy tightening cycle,» says Zentner.

In the more recent episode, it largely reflected expectations that the tightening cycle in the United States would be noticeably more pronounced than in Australia.

These arguments include the Fed Model, the advocacy of price / operating earnings ratios, supposed links between earnings growth and market returns, arguments that the end of a Fed tightening cycle is quickly favorable for stocks, etc..

In previous episodes, long yields tended to rise in the early stages of a tightening cycle at least as much as the rise in short rates, reflecting inflation concerns.

Japan remains an exception to the tightening cycle.

Now, as I noted fairly early this year, there's no statistical evidence at all that stock prices or corporate earnings perform well in the 18 months or so following the end of a rate - tightening cycle.

Since the beginning of its current tightening cycle in June 2004, the federal funds rate has been increased from 1.0 per cent to 2.5 per cent in increments of 25 basis points at each Federal Open Market Committee (FOMC) meeting.

Fed Chair Janet Yellen last week signaled the U.S. central bank is on track to raise rates this year, despite a weak first quarter that some analysts believe could force the Fed to wait longer before starting its first tightening cycle since 2004 - 2006.

Indeed, I believe the Fed will raise rates in a slow manner that doesn't excessively unsettle the economy or markets, with the gradual nature of the tightening cycle allowing markets to absorb the increases with relative ease.

Our interest rate outlook is also partly driven by the view that the BoC intentionally wants to lag the Fed in terms of its tightening cycle.

However, the Fed's emphasis on downside risks is injecting a degree of uncertainty — and volatility — into markets, a factor not lost on global policymakers that are calling on the Fed to end its handwringing and begin the tightening cycle.

Our view that the Canadian interest rate tightening cycle will lag that in the United States is therefore primarily the result of factors outside of the respective business cycles.

In addition, with most countries in emerging Asia running a current account surplus and possessing sizable foreign currency reserves, I believe emerging Asia could be better positioned to withstand a Fed tightening cycle than other emerging markets.