The Weekly Report

  • An early edition of The Weekly to cover several items that couldn’t be wedged into last week’s report. It starts with a ‘shopping list’ approach to sector analysis based on total returns – including duration-adjusted results – for November and the quarter to date. The approach confirms other FTN analysis that longer intermediate maturities are better relative values at the moment. Then, it sorts through mortgages, agencies and investment grade credit to identify places to start looking for securities that can work for individual portfolios. In a tumultuous market, this is a much more efficient approach than pouring over charts and statistical tables for ideas.
  • Household leverage returned to its previous trend after a slump in the first half of the year. The growth still leaves ample capacity for more leverage if consumers wish to push consumption a little faster than their income growth.
  • Underperformance by TIPS leads gains of intermediate Treasuries by 1-2 months. Inflation protected securities are poised for their third consecutive month of negative results. The gains in 5-yr and 7-yr UST this month should not be that surprising given TIPS’ woes earlier this fall. The surprise is the size of the gain. The barometer functions in both directions for future yields, creating a new tool to maneuver through confusing yield curve volatility.
  • The Weekly Report is scheduled for its next publication on December 14.
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