Market Sense
Market Sense is HB Wealth's recurring economic and market research, authored by Gina Martin Adams, Michael Casper, Adam Shealy, Matthew Sanders, and Max Hurd. These insights offer perspective on current market conditions, economic trends, and investment risks across short- and long-term horizons.
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Abstract: Treasury yields across the curve have been surging to multiyear highs, making waves for markets, but also resulting in an interesting divergence in spreads. From early February to September, the spread between 10-year and 2-year (2Y10Y) Treasuries compressed from 70 basis points to lows near 20, creating some concern…
Abstract: Treasury yields have been surging and rates have been pressuring S&P 500 multiples. Since late last October, the S&P 500 is up about 12.5%, but trailing and forward price/earnings multiples are down 1.7 and 4.1 turns, reflecting the rise in interest rates. Our models suggest that this recent trend…
Bond Vigilantes are the Captain Now as Fed Finally Capitulates. The Federal Open Market Committee’s hand was forced to hike this month as yields across tenors climbed north of 5%, and various measures of growth and inflation continued to run hot. Fortunately, signals of economic strength give the central bank…
Abstract: Bond Markets Approach Long Term Norms, Surge Mostly on Improving Growth Outlook Rates across the Treasury curve are one the rise, with the 5-year Treasury bond above 5% for the first time since June 2007 after a poor auction showed limited demand for the tenor, the 10-year Treasury now…
Bond yields have surged over the last six months, making waves for financial markets at large, but also improving prospects for bond market returns going forward. After years of struggle following extremely low yields of less than 1% during the pandemic, today’s starting yields over 5% for most tenors put…
Abstract Since early July, US average diesel prices are up nearly 37% while unleaded gas has risen more than 18%. This is pressuring the consumer from a few different angles. Diesel’s climb has raised shipping costs which could ultimately be passed through to the consumer in end-product prices. Likewise, both…
First Rate Hike in Three Years Calms Bond Vigilantes for Now. The Federal Open MarketCommittee (FOMC) hiked rates this week to 3.75-4% and suggested another hike to come by the end ofthe year as inflation remains well above their comfort levels. Markets generally responded well to thenews. The chair indicated…
Abstract: TIPS Often Struggle to Protect from Inflation In the Way that Investors Intend The history of TIPS performance during inflation spikes shows how inconsistent returns can be in different environments. Over the 22-year life of the popular ETF for TIPS exposure “TIP”, performance has often failed to meet the…
AI model developers are discussing a slower pace of frontier model development as concerns about safety emerge, and markets are nervous this may materially alter the AI trade. While unusual to hear corporations openly advocate for slower growth, paced development may not necessarily be a bad thing for the market,…