PERSPECTIVES

New Century Advisors’ market commentaries offer a unique and insightful perspective on capital markets topics.

 

June 2017 Inflation Dashboard: Patience Challenged as Risks Mount

  • The strengthening global economy continues to take a back seat to rising energy volatility and domestic political risks
  • Oil resumed selling after OPEC and non-OPEC exporters voted to extend production limits
  • Fiscal stimulus and tax and regulatory reform, once upside risks to domestic growth and inflation, have given way to political risk with the Justice Department naming a special counsel to oversee the Russia investigation
  • The Fed is still expected to hike rates again later this month, but the path going forward is increasingly uncertain
  • TIPS valuations remain supportive from a fundamental standpoint as breakevens remain cheap to inflation forecasts

May 2017 Inflation Dashboard: Fundamentals Call for Patience

  • Unpacking the weak March CPI print
  • Energy risks flare up again, but food tailwinds pick up
  • Front end BEIs continue to look fully valued and increased oil volatility warrants caution
  • Intermediate and longer dated BEIs remain compelling

 Looking for the Fat Pitch

  • ‘Fat pitches’ are rare, but the market will occasionally throw smaller, chubby pitches.
  • Major index rule changes cause dislocations.
  • 15% of the investment grade utilities sector dropping out of the index
  • Opportunity to acquire high quality credits at discounts

 April 2017 Inflation Dashboard: Fundamentals vs. Technicals

  • The Trump reflation trade stalled in March as markets await policy progress
  • Energy tailwinds are set to fade, while food tailwinds emerge
    • Front end BEIs look fully valued and increased oil volatility warrants caution
    • Intermediate and longer dated BEIs remain compelling
  • Fund flows have slowed
    • Trump traders are the wild card; look out if they lose faith in the reflation theme

 

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