Liquidity, liquidity, who’s got the liquidity?
Readers of somewhere around my years may remember playing the child’s game ‘button, button, who’s got the button?’, though it has its roots as far back as the late 1800s. In the game, only one child ends up with the button.
As for the Federal Reserve in the current economic crisis brought on by COVID-19, everyone gets liquidity.
I enjoy writing the fourth quarter commentary; other than the highlights of the quarter, it provides an opportunity to look back at some of the prominent events of the entire year. And what a year it was.
“In the middle of 2018, I said that the more things changed, the more they seemed to stay the same. That was not the case for July through September of this year. “
About mid-June I received an interesting question from a colleague at Howe & Rusling—one that probably could have come at any point over the past few months, but with the end of the quarter looming, it seemed the perfect time.
The fixed income markets certainly started off 2019 on the right foot. To use an old saying generally reserved for the month of March (though this is a quarterly commentary), the first quarter came in like a lion. The first two weeks of 2019 saw 10-year Treasury yields jump by over 20 basis points. And the first quarter went out… like a lion. Following the volatility that we saw in the last quarter of 2018 in risk assets (equities and non-Treasury securities) and the resulting flight to quality, the Federal Reserve’s attempt at calming the markets had an over-sized effect of sending them in the opposite direction.
What a way to end a year. As the third quarter was ending, it seemed everyone was expecting yields to continue the slow ascent for the final three months of 2018.
I’d like to introduce our newest addition to our fixed income team, John Trentacoste, who has written the Bond Market Overview this quarter.
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