Pragmatic Capitalism

Capital for Living a More Practical Life

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Technicals on Tens – Recent Breakpoints to Rally

Despite accommodative monetary policy via QE3, yields on U.S. Treasuries remained range bound where buyers and sellers were indecisive on the direction of the market. However, with the latest weakness in risk assets as market watchers point to uncertainty surrounding the Fiscal Cliff, yields have broken below this sideways trend in a flight-to-quality bid and may challenge the recent lows.

RBC: Why the USA Will Remain Dominant Vs China

Critics point out the tremendous amounts of debt and political dysfunction as major headwinds toward long term economic prosperity for the U.S. With massive amounts of debt incurred from two wars and the bailouts stemming from the financial crisis coupled with the lack of political will to address it, the U.S. faces an uphill battle in maintaining its position in the economic balance of power.

Small Business Hiring Plans Are Declining

By Rom Badilla, CFA, Bondsquawk Fueled by a drop in hiring plans, sentiment by small businesses in the U.S. failed to increase in September which suggests stalling of improvements in both the labor markets and the economy. The National Federation of Independent Businesses released the results of its Small Business Optimism which fell by one… Read More

Credit Default Swaps Flinch as Bonds Play Chicken With Stocks

Several days ago, we talked about the Federal Reserve’s intent of improving financial conditions by way of balance sheet expansion and QE. Their recent policy action is generally supportive of risky assets such as corporate bonds and equities. Since the announcement, spreads and equities have performed as expected.

Chicago Fed Data Points to Slowing Economy

The start of the week featured two major economic data releases. The first release revealed that the U.S. economy is showing signs of weakness while the second release as a separate report showed that manufacturing in the Texas region improved in September.

High Grade Corporate Bonds Ownership Trends

High Yield Grade bond market has grown significantly for the past years at a rate close to 7%, and now amounts to a size of nearly $4.7 trillion. Looking at the issuance trends, the portion that non-financial issuer take in the overall issuance of the HG USD bonds has expanded since the credit crisis as shown in the graph below, while financial issuers have dramatically subdued their issuance of the HG bonds.