Checking in on Morgan Stanley and Goldman Sach's Earnings
Jan 16, 2024
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Ken Leon breaks down big bank earnings. Hayley Berg shares travel outlook. Joel Weber and Eric Balchunas discuss Businessweek Magazine story on ETFs. Katy Kaminski Drive to the Close.
The bond market is shifting towards a bullish outlook with a possibility of a steeper yield curve and fewer rate cuts by the Fed.
Monitoring bond volatility and bond-stock correlation are crucial indicators to better understand the bond market and market trends.
Deep dives
Bond market signals a time to buy as worst rout in decades subsides
Katie Kaminski, Chief Research Strategist and Portfolio Manager at Alpha Simplex Group, sees a shift in the bond market from a short position to a more bullish outlook. She believes that the next phase for the bond market is a steepening in the yield curve, which is already starting to happen. She also acknowledges the possibility of a scenario where weakness in long-term bonds leads to a steeper yield curve, rather than cuts in the short term. While a 6% yield on the 10-year Treasury is not imminent, it remains a possibility within this market cycle.
Finding a balance between more Fed cuts and a steepening yield curve
Although the market has priced in six quarter-point rate cuts by the Fed, Katie Kaminski believes that the central bank may not be as aggressive in cutting rates. She predicts a bumpy ride in the bond market, with a convergence towards a middle ground of around three to four rate cuts this year. Kaminski also notes that the market is starting to price in more rate cuts based on technical indicators, even though the Fed's dot plot suggests a more moderate rate-cutting path.
Short signal on the US dollar amidst market noise
Kaminski explains that while there has been a short signal on the US dollar gaining momentum, recent movements in the currency have been more mixed. Factors such as selling pressure on the dollar at the end of the quarter and the Fed potentially being less aggressive in rate cuts could favor the dollar. She also highlights the importance of monitoring bond volatility and bond-stock correlation as key indicators to watch in the market.
Key takeaways and signals to watch in the bond market
Kaminski emphasizes the significance of monitoring bond volatility and bond-stock correlation as key signals in the bond market. Bond volatility remains high, while the correlation between bonds and stocks is important to gauge market trends. She advises keeping an eye on these indicators to better understand the market outlook.
Ken Leon, Global Director of Research at CFRA, breaks down big bank earnings and outlook. Hayley Berg, Economist at Hopper, shares her research on the travel outlook for 2024. Bloomberg Businessweek Editor Joel Weber and Bloomberg Intelligence Senior ETF Analyst Eric Balchunas talk about the Businessweek Magazine story From Great Bitcoin Race to RTO Trade, Five ETFs to Watch in 2024. And we Drive to the Close with Katy Kaminski, Chief Research Strategist and Portfolio Manager at AlphaSimplex. Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.