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Outlook for the markets, economyD: Harris Financial Group Managing Partner Jamie Cox, Raymond James President of Fixed Income Kevin Giddis and Options...
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Process of but the -- but let's Kevin get this.
Raymond James had a fixed income capital markets.
And Jamie Cox managing directors at Harris financial group but I'll I'll start with Kevin here.
You're with fixed income again the yields on the ten year -- -- people are still rushing into this one it seems to be slightly.
Dead money I mean he -- -- treasuries are -- money but what do you make of this without -- -- on the ten year once again fallen.
You know start about three weeks ago with the last employment report the payrolls number coming in much lower than expected really kind of set off a pattern that.
That broke the trend line -- trend line was higher rates.
That was feeding the equity market in the anticipation that the economy was about to lift -- but that didn't happen.
And so what we've seen over the last two weeks is that the fear trade come back into the market.
Buying back out of the long -- expecting the Fed to be very.
Very accommodative and then last week.
We -- talked about -- finance seen in the Fed be in the big issues but turns out Spain was the big issue.
With the downgrade -- that brings the eurozone back into the picture so the combination of those effects especially as we go into this week's employment report.
Is lower rates so what -- is done is is drive interest rates a good thirty basis points down in the ten year note.
Now the question is is that attractive here do you think it goes much lower my guess is we're we're gonna stay in this side trend line for a little while longer and Friday's number be in the key.
-- go to Jamie Jamie we seem to stop perhaps although I say that -- what -- they've finished the -- -- -- another way inhibit.
Are you saying why you concerned about the springs slide of most of first quarter gains based more on optimism and done reality.
I think -- need to look at the data to get the answer that right and although the data is becoming a kind of soft.
Under underneath the surface of the Chicago PMI data and some of that in the Dallas fed today.
You've seen that income is actually outpacing spending but I actually think that's very good for the markets going forward.
And I don't think the data suggest anything of a slowdown actually think that were just an a seasonal period here.
Anything consumers and particularly in retail investors that I deal with the starting to spend more and more they're no longer can't doubt trying to hide out not spend.
We're seeing people make -- boat purchases home purchases things that they deferred over many many years so I think the US consumers still alive.
And I think -- the percentage of income debt service is at the lowest since 1984 so let's not discount the spenders in the United States just yet.
We think it's playing out -- -- earnings that we -- certainly but it'd -- -- -- you're watching the action in the pits and certainly today we have a Carol pepper who invests four.
High net worth individuals and -- -- what's the one thing.
Multi multi millionaires are doing with their money right now she said they're getting back into equities OK so their legs and a half months late but.
That it sometimes that's the Smart money just being careful is that not.
Yet is but I mean that they are getting back to an artist I mean we've been sitting down talking to clients.
They're implementing strategies like cover called selling short -- to get into positions I mean they are getting very active right now they're putting their money to work.
They see some promise going forward.
That's what we're discussing with -- in the trade.
That we've been seeing coming into the threats and there may get to candid on the F corporate bonds -- -- people like cut corporate bonds Kevin do you think they all over the board why is that.
Well they -- this huge demand for corporate debt especially in the new issue market and and a declining secondary market which is cause those spreads to come in quite a bit.
I'm Greg we're going on about two years as a spread could contraction there and and so -- -- It makes the value -- Of about.
Of a corporate bond not as some attractive to an investor vs say a Muni bond where.
The yields are our most absolutely on top -- treasuries and then when you at a tax bracket.
Yields go up by a hundred basis points is just better value and one market vs.
