Commentary pieces that cover fixed income economic and financial market topics relevant to financial institutions
Recently, the government reported that Americans have stopped deleveraging, as they took on more new debt than they paid off, or wrote off, during the third quarter. Consumer borrowings have increased in two of the last three quarters after falling for 14 consecutive quarters. Something of note may be underway.
The Jackson Hole speech is over. The conventions are over. The campaign will soon be over. I, for one, am starved for some economic candor. It seems that politicians and policymakers can’t bring themselves to speak the truth that we all know to be self evident.
This author, for one, is not among those who are highly critical of the numerous actions undertaken by the U.S. Treasury and the Federal Reserve to navigate the financial crisis. While there is plenty of blame to be apportioned regarding pre-2008 failures, including irresponsible corporate leadership, irresponsible financial leverage, irresponsible lending, security underwriting, and investing, and ineffective regulatory oversight, the subsequent actions by the Treasury and the Fed have been highly effective.
An old adage, “sell in May and go away”, has been especially valid over last three years when corporate spreads tightened in the first quarter and rapidly widened in the second. Uncertainties related to the health of domestic economy as well as European sovereign/debt crisis have rightfully been causing negative sentiment toward credit risk. It is these environments that create opportunities for value driven investors like BBH.
Housing market pain is still pervasive across American households, but the woes have receded from headlines as the shock of sharp price declines has worn off