Basis Points

Following last week’s “hotter” than expected CPI release, the sole focus for the money and bond markets was to, yet again, dial back their Fed rate cut expectations. Ahead of the May FOMC meeting, this week on the Basis Points podcast, Kevin Flanagan dives into an aspect of Fed policy decision-making that has been flying under the radar: the balance sheet. Basis point: 1/100th of 1 percent. Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living. Federal Open Market Committee (FOMC): The branch of the Federal Reserve Board that determines the direction of monetary policy. Tapering: A shift in monetary policy by which the Federal Reserve would begin decreasing the amount of bonds it purchases.

The first three months and change of 2024 has brought with it a rather noteworthy shift in bond market sentiment. With Fed policy decision-making remaining data dependent for the foreseeable future, this week on the Basis Points podcast  Kevin Flanagan discusses why investors should consider utilizing the time-tested barbell strategy to navigate not only the current setting, but more importantly, what potentially lies ahead. 

Basis Point: 1/100th of a percent  

Bloomberg Aggregate Bond Index : The Bloomberg Aggregate Bond Index or "the Agg" is a broad-based fixed-income index used by bond traders and the managers of mutual funds and exchange-traded funds (ETFs) as a benchmark to measure their relative performance.

As the inflation marathon enters the homestretch, the last mile might not be about to get more difficult. This week on the Basis Points podcast, Kevin Flanagan discusses why the journey to the Federal Reserve’s target might not be as smooth as anticipated, and what this could mean for rate cuts and the bond market’s response.

Basis point: 1/100th of 1 percent.

Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.

Personal Consumption Expenditure (PCE) Price Index: measure of price changes in consumer goods and services in the U.S. economy.

At today’s FOMC meeting, the Fed did what was widely expected yet again and kept the Fed Funds target unchanged. This week on the Basis Points podcast, Kevin Flanagan discusses the Fed’s balancing act between hopeful markets and the reality of economic indicators and what it means for the future of U.S. Treasuries. Basis point: 1/100th of 1 percent.

With income back in fixed income, uncertainty around the bond markets and a new rate regime in play, one strategy (and two new ETFs) can help you prepare for a range of rate scenarios. This week on the Basis Points podcast, Kevin Flanagan is joined by WisdomTree CIO of Fixed Income & Model Portfolios Rick Harper to discuss laddered treasury solutions — the time-tested approach behind our Suite of Treasury ETFs.

Basis Point: 1/100th of a percent.

With rate cuts now being the primary focus of the markets, the conversation has revolved around when such a move could occur and what the path would ultimately look like. This week on the Basis Points podcast, Kevin Flanagan discusses the rate cutting cycle that occurred in 1995/1996 and how it parallels the current market environment.

Basis Point: 1/100th of a percent.

The U.S. economy and inflation have surprised the bond market in 2024, reversing the rally of 2023. This week on the Basis Points podcast, Kevin Flanagan explores the implications of this on the UST 10-year yield and the Fed’s rate policy. 

Basis point: 1/100th of 1 percent. 

2024 marks ten years since the issuance of U.S. Treasury (UST) floating rate notes (FRNs) and the launch of our Floating Rate Treasury Fund (USFR). This week on the Basis Points podcast, Kevin Flanagan discusses how USFR seeks to offer a solution for the current and prospective interest rate landscape.

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Basis point: 1/100th of 1 percent.

Treasury floating Rate Notes: a debt instrument with a variable interest rate. The interest rate for an FRN is tied to a benchmark rate. Benchmarks include the U.S. Treasury note rate, the Federal Reserve funds rate—known as the Fed funds rate—the London Interbank Offered Rate (LIBOR), or the prime rate.

Bloomberg US Aggregate Total Return Index: a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.

Yields are high and profit margins have held up well despite rising cost pressures. How will that affect U.S. Credit? What are the drivers behind this growth? And where is the market headed? This week on the Basis Points podcast, Kevin Flanagan leads a discussion with Morgan Stanley’s Vishwas Patkar on what makes U.S. credit potentially attractive to investors and advisors, and the trends that will shape it over the next year.

Basis Point: 1/100th of a percent.

Is the U.S. Treasury market experiencing a "Groundhog Day"? This week on the Basis Points podcast, Kevin Flanagan reflects on this time last year when the bond market was anticipating a recession and counting on weak jobs data to confirm it as we enter a similar narrative heading into 2024.

Basis Point: 1/100th of a percent.

Today marked the first FOMC meeting of 2024, and as widely expected, the Fed kept the Fed Funds target unchanged. We believe rate cuts are coming, but they do not appear to be imminent just yet. This week on the Basis Points podcast, Kevin Flanagan provides his insights on the Fed’s timing for rate cuts in 2024 and analyzes factors that will affect monetary policy in 2024.

Basis Points: 1/100th of a percent.

An interesting development occurred last week: Fed 'pushback'. This week on the Basis Points podcast, Kevin Flanagan discusses what this means and what investors should be considering regarding how to play this pivot in monetary policy.  

Basis point: 1/100th of 1 percent. 

The money and bond markets appear to be ‘doubling down’ on their optimistic expectations for Fed rate cuts this year, leaving investors to continue to be faced with elevated volatility. This week on the Basis Points podcast, Kevin Flanagan reviews the latest U.S. Treasury yields and discusses how investors can play defense against this backdrop.

Basis point: 1/100th of 1 percent.

This year was a roller coaster for fixed income. What's in store for investors in 2024? This week on the Basis Points podcast, Kevin Flanagan provides a 2023 recap and outlines some key themes for the new year.

Basis Point: 1/100th of a percent.

While the Fed didn't cut rates at the December policy meeting, we believe they will be coming in 2024. This week on the Basis Points podcast, Kevin Flanagan highlights two WisdomTree funds that can help bond investors navigate the investment landscape that may be lying ahead.

Basis point: 1/100th of 1 percent.

At today’s FOMC meeting, the Fed did what was widely expected and kept interest rates unchanged. This week on the Basis Points podcast, Kevin Flanagan provides his insights on the disconnect between the Fed and market expectations, as well as the impact on fixed income investors.

Basis Points: 1/100th of a percent.

What action will the Fed take next and where is the market headed? In this special episode of the Basis Points podcast, Kevin Flanagan is joined by Matt Hornbach Global Head of Macro Strategy at Morgan Stanley. During the episode, the speakers offer their insights and perspectives on Morgan Stanley’s 2024 Outlook for the bond market titled Land of Confusion. They also discuss the market’s expectations given the current decline in Treasury yields and uncertainty regarding interest rates.

Basis point: 1/100th of 1 percent.

Federal Open Market Committee (FOMC): The branch of the Federal Reserve Board that determines the direction of monetary policy.

Yield: The income return on an investment. Refers to the interest or dividends received from a security that is typically expressed annually as a percentage of the market or face value.

One of the more noteworthy developments in the financial markets of late has been the plunge in U.S. Treasury (UST) yields. This week on the Basis Points podcast, Kevin Flanagan reviews the implications and provides some monetary policy outlook for 2024.

Basis point: 1/100th of 1 percent.

Federal funds rate: The rate that banks that are members of the Federal Reserve system charge on overnight loans to one another. The Federal Open Market Committee sets this rate. Also referred to as the “policy rate” of the U.S. Federal Reserve.

Treasury yield: The return on investment, expressed as a percentage, on the debt obligations of the U.S. government.

We believe investors are being faced with a new rate regime as we get ready to enter 2024. This week on the Basis Points podcast, Kevin Flanagan surveys the state of the U.S. Treasury (UST) market and outlines how investors can prepare.

Basis Point: 1/100th of a percent.

As we approach the end of 2023, investors may want to take stock of their fixed income portfolio and consider how to position for the new year. This week on the Basis Points podcast, Kevin Flanagan discusses tax-loss harvesting and how to implement a barbell strategy with a few of our fixed income ETFs.

Basis point: 1/100th of 1 percent.

Duration: A measure of a bond’s sensitivity to changes in interest rates. The weighted average accounts for the various durations of the bonds purchased as well as the proportion of the total government bond portfolio that they make up.

One takeaway from the November FOMC meeting is that tighter financial conditions are now a key monetary policy input. This week on the Basis Points podcast, Kevin Flanagan analyzes the Chicago Fed National Financial Conditions Index to gauge the current state of the markets. Basis Point: 1/100th of a percent.

At today’s FOMC meeting, the Fed voted to keep interest rates unchanged. As a result, the trading range remains at 5.25%–5.50%, a more than 20-year high watermark. This week on the Basis Points podcast, Kevin Flanagan analyzes the impact of the rise in Treasury yields, the ongoing quantitative tightening and the new rate regime on fixed income investors. 

Basis point: 1/100th of 1 percent.

We believe investors are being faced with a new rate regime as we get ready to enter 2024. This week on the Basis Points podcast, Kevin Flanagan surveys the state of the U.S. Treasury (UST) market and outlines how investors can prepare.

Basis Point: 1/100th of a percent.

The U.S. economy has been resilient despite the inverted yield curves, but is it too early to celebrate? This week on the Basis Points podcast, Kevin Flanagan discusses how the recent surge in UST 10-yr yield has changed the shape of the curves and what it means for the future of the economy.

Basis point: 1/100th of 1 percent.

Halloween season is now upon us and if you look at recent price action within the U.S. Treasury (UST) market, it looks as if the ‘spooks’ have already started. This week on the Basis Points podcast, Kevin Flanagan discusses why this is happening and how investors can position their bond portfolios as the U.S. Treasury market 10-year yield hits a 16-year high.

Basis point: 1/100th of 1 percent.

Barbell: The barbell is an investment strategy applicable primarily to a fixed income portfolio.

The Fed left the interest rates unchanged at today’s FOMC meeting, keeping the trading range at 5.25% –5.50%. Could the markets still see another rate hike in 2023? This week on the Basis Points podcast, Kevin Flanagan discusses the possibility of another rate hike as we move into Q4 and head toward 2024.

Basis point: 1/100th of 1 percent.

One of the more surprising outcomes so far this year is that markets have yet to see a recession. This week on the Basis Points podcast, Kevin Flanagan examines two indicators of economic growth, GDI and GDP, and discusses what to anticipate in Q3 and the rest of 2023. 

Basis Point: 1/100th of 1 percent. 

While the Fed has emphasized that future policy decisions would be based on the “totality” of upcoming economic data, make no mistake, employment reports go to the front of the line. As the September FOMC meeting approaches, Kevin Flanagan analyzes the latest jobs numbers on this week’s episode of the Basis Points podcast.

Basis point: 1/100th of 1 percent.

While Powell didn’t offer up any groundbreaking headlines in his Jackson Hole speech last week, the overarching message from the chair still resounds loud and clear: rates will be “higher for longer.” This week on the Basis Points podcast, Kevin Flanagan aims to answer the question, how high and how long?

Basis point: 1/100th of 1 percent.

For those looking for a summer respite for the bond market in August…think again. This week on the Basis Points podcast, Kevin Flanagan gets into the root causes of the recent increase in the 10-Year yield and whether it is reasonable to expect a reversal any time soon.

Basis point: 1/100th of 1 percent.

How does the U.S. budget deficit affect the Treasury market and the economy? This week on the Basis Points podcast, Kevin Flanagan covers the recent developments on the deficit, the U.S. government’s long-term rating downgrade, and the funding challenges.

Basis Point: 1/100th of a percent.

Throughout the course of the current Fed rate hike cycle and attendant increase in the U.S. Treasury (UST) 10-year yield, investors periodically ask: is it time to go long duration? This week on the Basis Points podcast, Kevin Flanagan explains why it’s better to be late rather than early to the duration party against this backdrop.

Basis Point: 1/100th of 1 percent.

The Federal Reserve voted to raise rates by another quarter point at today’s FOMC meeting. This pushes the fed funds target range to the highest level since early 2001. This week on the Basis Points podcast, Kevin Flanagan discusses the outcome of today’s meeting and what to expect for the remainder of the year from the Fed.

Basis Point: 1/100th of 1 percent.

Is 2022 the year not to be named? After what was arguably the worst year on record, we believed this year could be a positive one for bond investors. This week on the Basis Points podcast, Kevin Flanagan takes a look back and ahead at key economic indicators to provide a first half report card for the fixed income markets and what investors might expect in the second half of the year.

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Following the June FOMC meeting where Fed hit pause, speculation began to intensify about what the policymakers next move could be. This week on the Basis Points podcast, Kevin Flanagan delves into the recent Fed developments and if the Fed is really going to pause rate hikes for the summer.

Basis Point: 1/100th of 1 percent.

As the Federal Reserve's "hawkish pause" dominates headlines, investors are left wondering when the long-anticipated recession will be coming. During this week’s episode of the Basis Points podcast, Kevin Flanagan is joined by Head of Credit Strategy, Sri Sankaran of Morgan Stanley to discuss the current dynamics in the high yield bond, credit default and leverage loan markets.

Basis Point: 1/100th of a percent.

Throughout this Fed rate hike cycle, there always seemed to be some sort of disconnect between what the policymakers were saying and what the money and bond markets were thinking. Recently, 'don't fight the Fed' seems to be the current sentiment. This week on the Basis Points podcast, Kevin Flanagan discusses the shift.

Basis Point: 1/100th of a percent.

For the first time since the Fed began raising rates in March of last year, the voting members did not implement a rate increase at the recent June FOMC meeting. This week on the Basis Points podcast, Kevin Flanagan discusses U.S. monetary policy implications, including investor expectations for the remainder of the year as Powell & Co. take a pause from rate action. 

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With the debt saga still ongoing, sometimes looking at current headlines juxtaposed with historical events can provide some useful context. This week on the Basis Points podcast, Kevin Flanagan covers what investors can learn from the 2011 credit rating downgrade.

Basis Point: 1/100th of a percent

The money and bond markets find themselves in an interesting spot on the calendar, nestled right in between the May and June FOMC meetings. This week on the Basis Points podcast, Kevin Flanagan discusses the latest Fedspeak and if it could translate to a skip, a pause, or even a cut. Basis Point: 1/100th of 1 percent. 

It’s been roughly two months now operating in a post-Silicon Valley Bank (SVB) World and the markets are still feeling its impact. This week on the Basis Points podcast, Kevin Flanagan discusses a very important arena where developments have seemingly flown under the radar of late: the funding markets. 

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How concerned should investors be about the pending debt ceiling debate? This week on the Basis Points podcast, Kevin Flanagan reviews past debt ceiling sagas, discusses what investors should focus on and looks at possible outcomes. 

Basis Point: 1/100th of 1 percent. 

In what was a widely expected outcome, the Fed raised interest rates by another quarter point today, elevating the Fed Funds trading range to its highest level since 2007. Now what? This week on the Basis Points podcast, Kevin Flanagan discusses what to expect from Powell & Co. next and what to anticipate for the investment landscape in the months ahead. 

Basis Point: 1/100th of 1 percent. 

Do you remember when inverted Treasury Yield Curves were all the rage? This week on the Basis Points podcast, Kevin Flanagan reflects on the year that was and covers the state of the inverted treasury yield curves along with its predictive value on recession fears today. Listen now as Kevin discusses what’s at play in the Treasury market for investors, including, among other things, the 2- and 10-year gauges. Basis Point: 1/100th of 1 percent. 

After a slew of second-tier data points last week, the market was feeling uneasy about the economy's health, but the March jobs report could provide some breathing room for investors. This week on the Basis Points podcast, Kevin Flanagan discusses the impact of the latest economic data on the treasury market and potential recession risks. Listen now as Kevin dives deeper into the intersection of economic indicators and fixed income investing. 

Basis Point: 1/100th of 1 percent. 

This week on the Basis Points podcast, Kevin Flanagan discusses a new dynamic in the U.S. Treasury market ignited by the recent banking crisis. Listen now to hear Kevin’s insights regarding elevated volatility, unusual trading and key yield activities over the last month. 

Basis Point: 1/100th of 1 percent. 

This week on the Basis Points podcast, Kevin Flanagan discusses the Fed’s actions following the Silicon Valley Bank collapse. During the episode, Kevin covers the regional and international impact of the collapse and provides a silver lining as the markets continue to grapple with the aftereffects.

Basis Point: 1/100th of 1 percent. 

For the second meeting in a row, the Fed implemented a 25 basis point rate hike, bringing the new fed funds trading range to 4.75% - 5%. The question on everyone’s mind now is whether the Fed continues on their rate hike mission, or is a pause, or even a rate cut in the near future. During this week’s episode of the Basis Points podcast, Kevin Flanagan discusses the Fed’s attempt to thread the needle given this newfound level of uncertainty. 

Basis Point: 1/100th of 1 percent. 

Last week was eventful for the bond markets. During this week’s episode of the Basis Points podcast, Kevin Flanagan reviews the latest developments against the current backdrop.

Basis Point: 1/100th of 1 percent.

While inflation appears to have peaked last summer, unfortunately for the Fed, and by extension the bond market, the future road may not be as much of a one-way street to the downside as we saw during the autumn months. During this week's episode of the Basis Points podcast, Kevin Flanagan covers the latest Consumer Price Index data and explains why the Fed will continue to operate under the assumption it ‘has more work to do’ in fighting inflation.

Basis Point: 1/100th of 1 percent.