I have had requests for an updated blog considering all that has been happening in the markets and the economy. While low treasury yields, a measure of disinflation, a double-dip in real estate values and poor job growth may be breaking news to many investors and market participants, they have all been subjects of previous editions of this blog.
Here is the quick and dirty analysis of the fixed income world as we know it. During the first quarter of this year, the economy was finally gaining momentum however, because it was dependent on historically-accommodative Fed policy and U.S. manufacturing, much of which was export related the economy was very susceptible to disruptive events. The disaster in Japan provided such a disruption. Job growth and wage growth are also needed for the economy to march forward. Except for what appears to be a bounce-back from a snowy winter, job growth is disappointing.
Face it folks, the economy will trudge forward. Growth could top 3.5% the second half of 2011, but much more than that will be difficult. Next year, growth will struggle to reach 3.0%, but that is ok as it is approximately the 235-year average growth rate for the U.S.
Tomorrow I will discuss how various areas of the fixed income market might behave during the next six-to-twelve months.
2 comments:
the economy will trudge forward. Growth could top 3.5% the second half of 2011, but much more than that will be difficult.
Here's hoping you analysis proves correct!
Have a little faith.
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