Inflation: What’s Next?
IMPORTANT DISCLOSURES Dightman Capital does not provide tax or legal recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be […]
The Fed Pivots to Fight Inflation
On December 15, 2021, the Federal Open Market Committee (FOMC) of the Federal Reserve System made a significant shift in monetary policy in response to rising inflation. The Committee accelerated the reduction of its bond-buying program in order to tighten the money supply and projected three increases in the benchmark federal funds rate in 2022, […]
Rising Inflation: Where Will It Go from Here?
Though all economists expect inflation numbers to rise in the near term, there are different views on the potential long-term effects. In March 2021, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.6%, the largest one-month increase since August 2012. Over the previous 12 months, the increase was 2.6%, the highest year-over-year inflation […]
U.S. Credit-Card Debt Levels See Record Drop in 2020
U.S. Credit-Card Debt Levels See Record Drop in 2020 Despite the financial challenges experienced by Americans as a result of the coronavirus pandemic, U.S. credit-card debt dropped to record levels in 2020, decreasing by almost $83 billion.1 This unprecedented drop was likely the result of individuals receiving financial assistance through the Coronavirus Aid, Relief, and […]
REPO Market Update
Back in September the market received a warning from the REPO market where interest rates unexpectedly spiked higher. Before describing what may be interfering with REPO market operations, I want to point out that signals from the bond market, while important, generally represent a time horizon of a year or more. Unlike other technical, fundamental, […]
Collateral Damage
I have become aware of new information about what may be preventing the REPO market from operating properly. Despite emergency Fed intervention, the REPO market continues to have trouble meeting cash demands. It may not be a liquidity problem after all, it appears to be a problem with collateral. The following example from Fed Governor […]
Are Cracks Forming in the High-Yield Bond Market?
While high-yields bonds (HYG) have held up better than equities, there are signs of cracks forming. Negative developments at GE have caused some to speculate more highly leveraged borrowers are looking at downgrades. The lower tiers of investment grade ratings currently represent a large number of bonds and if we see a series of downgrades […]
Will Higher Interest Rates Derail Stocks?
Continued economic growth has led the Federal Reserve to raise the Fed Funds rate to 2.25%. This is the biggest issue facing asset markets right now even though the rate remains well below levels that led to recessions twice during the last 18 years. For that reason, I believe the Fed is going to be cautious […]
Trade Jabs & Big Tech Snafus
2018 has turned out to be a completely different investing environment from 2017. I have been reminded of debt market issues I thought I would not to have to address until 2019-20, beginning with interest rates. We remain in a low interest rate environment, well below levels we saw before both recessions we experienced earlier […]
Trade Negotiations & LIBOR Spike
Another round of volatility hit stocks this week, but current support levels remain, and volume has been tamer. The Nasdaq 100’s outperformance YTD remains intact suggesting tech investors are still committed to the sector. It’s one thing to see stocks under pressure but the recent spike in LIBOR (the rate banks lend to each other […]
