The Weekly Report


  • The Administration has issued stern warnings to China on the trade front this week until trying a little sweeter approach this afternoon. The day’s bond trading wrapped up more than two hours ago, but stocks reacted immediately to this week’s ceasefire. Banks are still lower on the day, though.
  • The bottom line for rates this week was a decline in both inflation expectations and real rates. The chart on the cover shows how inflation-adjusted 5-yr UST yields have turned lower again after flirting briefly with a small retracement in late January toward the 2-yr trend.
  • Uncertainty levies a toll on the bond market but it can’t slow down portfolio strategy execution. With a short-term +/- jump in rates of 25bp across the curve a real possibility in the next six months, a look at four different bond selections that produce better than a 3% yield while maintaining the risk discipline essential to intermediate maturity fixed-income portfolios.
  • After several confusing developments in January, the Washington picture for housing finance reform at least has a preliminary outline in February. Keep the second article handy as a guide to next week’s likely news and developments the rest of the spring. Government officials speak in code when it comes to GSEs, so we interpret into English.
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