After a Federal Reserve meeting like the one last week, it’s always prudent to take a step back and let the dust settle. So, let’s take a look at the U.S. Treasury (UST) 10-Year yield and ask ourselves the question: Where do we go from here?
Although the money and bond markets appear to be “chomping at the bit” for a rate cut, expectations for such action at the just-completed FOMC meeting were low. Kevin Flanagan discusses the outcome of today’s Federal Reserve meeting.
To watch the money and bond markets of late, there is one development that stands out quite clearly: the Federal Reserve has to cut interest rates. In fact, from the markets’ perspective, trade uncertainty plus economic weakness equals three rate cuts in the future.
Last week, we heard a narrative regarding the movement in the stock and bond markets—specifically, that the decline in U.S. equities resulted from the drop in the U.S. Treasury 10-Year yield. Typically, the bond market reacts to developments in the stock market, not the other way around. Kevin Flanagan investigates a possible shift in the paradigm.
The current landscape for the fixed income arena can be defined by two key factors: the yield curve and household cash positions. These two forces have placed a premium on short-term government investments in bond-land. Instead of going into products that are fixed in nature, Kevin Flanagan examines why investors should look to floating rate strategies instead.
Jeremy J Siegel
Senior Investment Strategy Advisor
CEO of WisdomTree
Jeremy Schwartz, CFA
Executive Vice President, Global Head of Research
Christopher Gannatti, CFA
Head of Research, Europe
Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January of 2014, he was promoted to Associate Director of Research where he was responsible to lead different groups of analysts and strategists within the broader Research team at WisdomTree. In February of 2018, Christopher was promoted to Head of Research, Europe, where he will be based out of WisdomTree’s London office and will be responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. He received his MBA in Quantitative Finance, Accounting, and Economics from NYU’s Stern School of Business in 2010, and he received his bachelor’s degree from Colgate University in Economics in 2006. Christopher is a holder of the Chartered Financial Analyst designation.
Head of Fixed Income Strategy
Tripp Zimmerman, CFA
Head of Fixed Income & Currency
Associate Director, Asset Allocation and Modern Alpha
Head of Capital Markets
Associate Director of Capital Markets
Head of Europe
Joseph Tenaglia, CFA
Associate Director, Asset Allocation
Jianing Wu joined WisdomTree as a Research Analyst in October 2018. She is responsible for analyzing market trends and helping support WisdomTree’s research efforts. Previously, Jianing completed internships and projects at Geode Capital, Starwint Capital, and Invesco Great Wall Fund Management with a focus in quantitative research. Jianing received her M.S in Finance from the Massachusetts Institute of Technology. She graduated with honors from Boston College with degrees in Mathematics and Philosophy.
Jeff Weniger, CFA
Director, Asset Allocation
Alejandro Saltiel, CFA
Associate Director of Modern Alpha
Alejandro Saltiel joined WisdomTree as a Quantitative Research Analyst in May 2017. He is responsible for quantitative research on WisdomTree’s products and global equity markets. Prior to joining WisdomTree, Alejandro worked at HSBC Asset Management’s Mexico City office as Portfolio Manager for multi-asset mutual funds. He started his career working at a boutique hedge fund that specialized on trading options on sector-levered ETFs. Alejandro received his Master’s in Financial Engineering degree from Columbia University in 2017 and a Bachelor’s in Engineering degree from the Instituto Tecnológico Autónomo de México (ITAM) in 2010. He is a holder of the Chartered Financial Analyst designation.
Matt Wagner, CFA
Modern Alpha Analyst
Matt Wagner joined WisdomTree in May 2017 as a member of the Research team. He is responsible for research on WisdomTree’s products and communicating the firm’s views on the markets. Matt started his career at Morgan Stanley, working as an analyst in Treasury Capital Markets from 2015 to 2017 where he focused on unsecured funding planning, execution and risk management. Matt graduated from Boston College in 2015 with a B.A. in International Studies with a concentration in Economics. Matt is a holder of the Chartered Financial Analyst designation.
Investment Strategy Analyst
Brian Manby joined WisdomTree in October 2018 as an Investment Strategy Analyst. He is responsible for assisting in the creation and analysis of WisdomTree’s model portfolios, as well as helping support the firm’s research efforts. Prior to joining WisdomTree, he worked for FactSet Research Systems, Inc. as a Senior Consultant, where he assisted clients in the creation, maintenance and support of FactSet products in the investment management workflow. Brian received a B.A. as a dual major in Economics and Political Science from the University of Connecticut in 2016, and is pursuing the Chartered Financial Analyst designation.
Kara Marciscano, CFA
Quantitative Research Analyst
Ryan Krystopowicz, CFA
Associate, Asset Allocation
Ryan Krystopowicz joined WisdomTree in March 2016 as a member of the Distribution Team and has transitioned over to the Asset Allocation Team as a Product Specialist, ETF Model Portfolios. He is responsible for maintaining and delivering data and content associated with WisdomTree Model Portfolios. Ryan also supports model development and decisions, as well as contributes to the commercial success of Model Portfolios by supporting the sales and client solutions team. He started his career at a Registered Investment Advisor working as Research Analyst and Assistant Trader. Ryan received a degree from Loyola University of Maryland and is a holder of the Chartered Financial Analyst designation.
When I see headlines along the lines of “Fixed income exchange-traded funds (ETFs) are not liquid and pose a risk to the system!” I can’t help but think, Stop the madness! Fixed income ETFs can actually add liquidity to the overall ecosystem and could potentially protect investors better than traditional investment structures.
While we remain firm believers in the long-term potential of emerging markets (EM), the past several years have been difficult due to increasing volatility and secular headwinds from a strong U.S. dollar. In our view, a bullish dollar position against a broad-based basket of developed and emerging market currencies provides a powerful option for managing currency risk in a portfolio of emerging market assets.
While the ultimate evolution of the path of U.S. interest rates remains uncertain, we believe our new strategies for risk management give investors a powerful tool kit for refining their fixed income exposure.
Even before the election results were fully counted in May, Indian currency and equity markets were reacting. After touching all-time lows last year, the rupee surged on the optimism that the reform-minded Modi would push through an agenda to improve Indian economic competitiveness.