Following the FED’s decision to decrease the Fed Funds rate by 0.25%, speculation, headlines and general concern surfaced about potential for negative interest rates in the U.S. As we mentioned in last month’s newsletter, 10-Year German Bunds are yielding a negative nominal yield. The 10-Year Treasury has seen a significant drop in its yield as investors flock to safety, under the assumption that a cut in the benchmark rate by the FED means the economy is headed for a slowdown. The saying hasn’t been mentioned much recently, but we really do appear to be in a “lower for longer” environment. Fixed income is poised for another season of very low yields and by no means would this be the first time that the U.S. has seen negative real rates. Despite the persistence of abnormally low interest rates (by historical standards) the likelihood of negative nominal rates in the U.S. is remote.
Read MoreThis summer has heated up rather quickly, and not in a good way. Even before the horrific events of this past weekend, there was an air of tension and conflict in many areas around the world. Massive protests have been happening in Moscow, Hong Kong, Pakistan, San Juan, Paris and elsewhere. And the trade tensions between the U.S. and China have hit a boiling point that only appears to be getting worse. For a while now, it has been hard to see either side backing down and it is causing real damage to both of the largest 2 economies in the world.
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