BNY Mellon Weekly Fixed Income Market Commentary - March 19, 2015
March 19, 2015
Central banks remain the dominant story for the market as surprise dovish actions continue to frame most of the markets discussion. We will add South Korea, Thailand and Sweden to the rate cut bandwagon, which totals 23 by our count. Not all central banks have moved in the same direction, but hikes are few and far between and even no action, as in the case of Turkey and Indonesia this week, is viewed as just a temporary pause in the process. Hence, the Fed's action of signaling the impending rate hikes continues to stand out in the crowd. Today's message from the FOMC was within this context as they removed the "patient" term from the policy statement, marking the end of six years of forward guidance. Instead, the FOMC will now move to a meeting to meeting approach with regard to rate hikes, with the caveat that April will not be included in that formula. Of course, since no one expected April, this was effectively an empty statement used to show that the Fed is trying to remain on message, but in reality has reservations on its ability to actually raise rates quickly and aggressively. The initial thought that removing patient would signal a more hawkish position from the Fed is, and was, incorrect in our view, as we felt that their view on economic projections was more important. On this front, the Fed downgraded its GDP expectations for 2015, 2016 and 2017, while inflation expectations were also lowered for 2015 and 2016. As the table below indicates, economic growth was lowered to 2.5% in both 2015 and 2016, while core PCE is expected to remain below 2% through at least 2016. The path for Fed funds was also lowered, with 2015 expectations falling to 75 bps from 1.15%, while the expectation for the 2016 funds rate fell to 2% from 2.5%. If we delve a little more into these figures, one has to question the timing of any hike in 2015, which will move those expecting a June hike to move into September, while those expecting a fall liftoff may well start to look into 2016. Additionally, we view inconsistencies in the Fed's belief that it can raise rates in 2015 when its 2016 year-end inflation expectations stand at just 1.7%. We suspect that the market will need to digest these tid-bits for the next few days, but it certainly takes the sheen off of the straight line march to a stronger dollar and parity on the Euro.
Investment Insights by Lockwood Advisors, Inc.
January 15, 2015

Fourth Quarter 2014
2014 ended as it began. The year got off to a frosty start courtesy of the polar vortex which put U.S. economic growth in a deep freeze. Furthermore, the year ended (and 2015 begins) with economic growth, monetary policies, and the impact of the swift, sharp decline in crude oil prices, all on divergent paths.

BNY Mellon Global Markets, LLC Weekly Market Commentary - TEST
April 09, 2014
BNY Mellon Economic Update
August 08, 2013
In his August 2013 Economic Update, BNY Mellon Chief Economist Dick Hoey states that he expects sustained global economic expansion, with a broad pattern of growth in both developed and emerging countries. From a longer-term perspective, emerging countries have a higher trend growth rate than developed countries, due to continued diffusion of modern technologies and the long-term uptrend in the productivity of their labor force. Cyclically, however, the countries with the best prospects for a near-term improvement in economic growth are the developed countries, as they recover from depressed levels of economic activity in response to easy monetary policy.
Investment Insights by Lockwood Advisors, Inc. - Fourth Quarter 2011
March 06, 2012
Global financial markets continued to be driven by economic headlines and ever-changing investor risk appetites during the fourth quarter of 2011. After a fierce third-quarter equity selloff, the bulls drove riskier assets higher in the beginning of the fourth quarter as volatility subsided from peak levels experienced during the late summer and early fall. Eventually the euphoria subsided and investors took the markets on another roller coaster ride through the end of 2011. As a result, financial market performance ended the year mixed with higher-quality investments substantially outperforming those perceived to carry more risk.
Investment Insights by Lockwood Advisors, Inc. - Second Quarter 2011
July 20, 2011
Despite the equity market's continued upward trajectory during April, numerous economic headwinds and political issues took their toll on financial markets during May and June. This ultimately resulted in little change to equity market prices during the second quarter of 2011. Supply and demand imbalances in the housing market, persistently high levels of unemployment and underemployment, and escalated debt levels weighed on consumers and depressed confidence levels.
Capital Markets Brief: Smoothing Out the Journey of Investing by Lockwood Advisors, Inc. - June 2011
June 10, 2011
Has diversification failed investors? And is there a right time to invest? The financial and real estate market crises that began in 2007 and the rapid equity market rise since early 2009 have left some advisors and investors wondering if the time-honored principles of portfolio diversification and the importance of proper asset allocation no longer apply. Chasing recent, strong-performing asset classes or strategies may be tempting to investors; but, unfortunately, it is often a detrimental strategy. The variability of returns among different asset classes poses difficulties in asset allocation. We believe within this variability lies the investor's greatest opportunity.
Retirement Income Strategies in a Difficult Environment
April 21, 2011

The financial challenge facing retirees today is unlike anything they have ever experienced before. A recent survey conducted by The Harris Poll found that, of 2,151 respondents, 34% of Americans have no retirement savings and 27% have no personal savings. This situation requires financial professionals to find new and innovative ways to address the retirement shortfall. As with any challenge, we are often forced to confront long-held basic assumptions and turn them on their heads.

Monthly Commentary and Market Outlook by Lockwood Advisors, Inc. - November 2010
January 05, 2011
The debt concerns facing various European countries re-emerged as a focal point for investors during November as Ireland received an aid package from the European Union and the International Monetary Fund. Many speculate that this will not be the remedy, nor the last aid package distributed, as bond yields have increased substantially for other European nations exhibiting similar debt and deficit characteristics. Elsewhere in the world, tensions on the Korean peninsula have been elevated, as a result of North Korea's shelling of a South Korean island. Both nations have increased their levels of military exercise.
Fixed Income Commentary, December 10, 2010
December 10, 2010
Taxes took center stage this week, as President Obama announced a tax compromise that would extend the Bush tax cuts for all, while also providing fairly favorable treatment of capital gains, dividends and the estate tax. In exchange, unemployment benefits would be extended for an additional year, while a surprise reduction in the payroll tax could potentially add up to 0.7% to GDP next year.
Fixed Income Commentary, December 3, 2010
December 03, 2010
Stocks and bonds gyrated this week on growing and then waning concerns over the viability of the European Common Union. Investors had not taken kindly to the details of the Irish bailout plan announced last week. Of primary concern was the belief that the plan would do little to stop deteriorating conditions in other periphery nations.
Monthly Commentary and Market Outlook by Lockwood Advisors, Inc. - October 2010
November 30, 2010
The financial markets traded in October with an eye toward November, eagerly anticipating the outcome of the mid-term elections, as well as the Federal Open Market Committee meeting, both of which took place in the first few days of November. Many market participants looked toward these events in hopes of gaining more clarity into the markets direction.
Capital Markets Brief: Are We There Yet? by Lockwood Advisors, Inc. - November 2010
November 19, 2010
On September 20, 2010, the National Bureau of Economic Research (NBER) made the announcement that it has determined an official end to the nation's most recent recessionary period. The NBER concluded that the recession, which began in December 2007, had actually culminated fourteen months ago in June 2009. And, while the U.S. stock markets treated the news with a favorable reception, the declaration left many pondering the relevancy of what may be a stale conclusion. At present, there are numerous indications that the U.S. economy is not functioning particularly robustly, and many may wonder exactly how it was reasoned that the recession ended over a year ago.
Fixed Income Commentary, November 19, 2010
November 19, 2010
Fixed income markets were generally weaker, as questions about the efficacy and longevity of QE2 are debated in the market. Treasuries yields were mostly higher by week's end, although they were stronger from the lows put in at the start of the week. The municipal market continued to struggle through another week of mountainous supply.
Fixed Income Commentary, November 12, 2010
November 12, 2010
As the markets continued to digest the impact of QE2, volatility picked up, with a slight move away from risk assets. Stocks retreated after returning to pre-Lehman levels last week. Treasury prices were lower on the week on weak auctions and a potential rethinking of the post QE2 trade.
Fixed Income Commentary, November 5, 2010
November 05, 2010
The Fed launched the much anticipated QE2 this week, announcing a $600 billion asset purchase program to be executed over an eight-month period. The $75 billion in monthly purchases will focus on the 5- to 7- year part of the curve, and had far less long bonds than many investors expected.
Fixed Income Commentary, October 29, 2010
October 29, 2010
This week's activity was dominated by expectations of next week's major events, mainly the elections and the Fed meeting. It is widely anticipated that the Republican party will control the House, with an outside chance of a Senate victory also.
Monthly Commentary and Market Outlook by Lockwood Advisors, Inc. - September 2010
October 27, 2010
The National Bureau of Economic Research (NBER) announced in September that the U.S. recession officially ended in June 2009. President Obama quickly noted that it does not feel like the recession has ended for many on Main Street who continue to struggle with unemployment and other issues. Warren Buffett also questioned this conclusion, pointing out that "common sense" analysis indicates that the country is not out of the recession yet.
Fixed Income Commentary, October 22, 2010
October 22, 2010
The markets continue to be dominated by the prospects of QE2, with investors remaining patient with their allocation to risk. Stocks were the biggest beneficiaries this week, as bonds were generally range bound to slightly weaker.
Investment Insights by Lockwood Advisors, Inc. - Third Quarter 2010
October 19, 2010
As equity market bulls and bears played "tug of war" during the third quarter of 2010, buyers closed out the quarter with the upper hand. The Dow Jones Industrial AverageSM put in its best quarter in 70 years, as the U.S. equity markets finished the third quarter of 2010 with positive gains. In fact, almost every developed and emerging country stock index tracked by MSCI Barra gained during the quarter, with Ireland being the only exception.
Fixed Income Commentary, October 15, 2010
October 15, 2010
The markets were dominated by foreclosure news, a weak dollar and strong corporate earnings during the week. The first two halted the multi-month rally in the bond markets, while the latter allowed stocks to post a positive week despite the first two items.
Fixed Income Commentary, October 8, 2010
October 08, 2010
The Friday, October 8 employment report posted a large headline miss, with payrolls contracting by 95,000 versus a flat expectation. The employment rate held steady at 9.6%, while the underemployment rate crept up to 17.1%. While in prior quarters, this miss would have caused a flight out of risk assets, it solidified the belief that the Fed would move forward on QE2 in the near term.
Fixed Income Commentary, October 1, 2010
October 01, 2010
Stocks posted their strongest September since 1939. The risk trade was in full force during the month, with "Don't Fight the Fed" being the rallying cry. While we worry about the complacency in the market that governments have the will and wherewithal to take care of global financial problems, the momentum is strongly in favor of risk.
Fixed Income Commentary, September 24, 2010
September 24, 2010
The Federal Reserve kept rates unchanged this week, although its policy statement indicated that it would launch QE2 if it felt the economy was faltering. As the purchase of treasuries would have a prominent role in QE2, government bonds rallied near the year's low yields and the 10-year closed at 2.55% mid-week.
Monthly Commentary and Market Outlook by Lockwood Advisors, Inc. - August 2010
September 21, 2010
In order to continue monetary accommodation and support economic recovery, the Federal Reserve announced that it plans to keep the assets on its balance sheet at the current level of approximately $2.05 trillion, and use the proceeds from maturing mortgage-backed securities to buy Treasury securities.
Fixed Income Commentary, September 17, 2010
September 17, 2010
Economic and corporate data continue to be mixed, consistent with slow growth, but absent indications of a double dip or deflationary pressures. Fixed income seems to be adjusting to this slow growth -- low rate reality, and fund flows continue to strongly favor bonds over U.S. equities.
Investment Insights by Lockwood Advisors, Inc. - Second Quarter 2010
September 01, 2010
After more than a year of near-constant growth, the equity markets took a breather in the second quarter. Equity indices across the globe contracted during the past three months, as many investors de-risked positions by shifting to cash and fixed income instruments. This retracement in the rally of equity prices is, in our view, a product of an atmosphere of increased uncertainty in the financial markets.
Capital Markets Brief: A Tale of Two Currencies by Lockwood Advisors, Inc. - August 2010
August 23, 2010
Nothing seems to rattle the markets quite like the periodic rumblings of currency adjustment that come from China.
Gain Insights on the Industry
May 23, 2008
Explore industry trends and best practices from marketing to back-office operations that could directly impact your firm in our newsletter, Practice Point.
BNY Mellon Global Markets, LLC Weekly Market Commentary - TEST