- Stop worrying so much about the taper and eventual end of QE, writes Bill Gross. Its has to and will happen at some point - the Fed cannot continue to add $1T to its balance sheet much longer without something badly blowing up.
- It's the policy rate that matters - how long does Fed Funds stay at 0%; what is the long-term neutral rate in this economy of ours; can the central bank convince investors it has a clue?
- We do know the increase of 125 bps in long-term rates has put a big dent in housing start growth and halted mortgage refinancings. It suggests to Gross that once QE is gone and the focus turns to Fed Funds, it'll be clear this rate is going to stay lower than expected for "a long, long time. Right now the market (and the Fed forecasts) expects fed funds to be 1% higher by late 2015 and 1% higher still by December 2016. Bet against that." (The CME awaits)
- "We have seen a 3% Treasury yield and a 4½% 30-year mortgage rate and the economy peeked its head out its hole like a groundhog on its special day and decided to go back inside for another metaphorical six weeks."
- Treasury ETFs: SHY, SHV, IEI, BIL, TUZ, FIVZ, DTUL, VGSH, DTUS, DFVS, DFVL, SST, ISTB, TBZ, TLH, TLT, IEF, DTYL, DLBL, ILTB, TENZ, ITE, TLO, EDV, VGIT, VGLT, TMF, TYD, LBND, UBT, UST, TMV, TYO, DSTJ, DSXJ, SBND, PST, TBT, DTYS, DLBS, TBF, TTT, TYNS, TYBS, TBX.
- Broad fixed-income ETFs: AGG, BND, LAG, SCHZ, BOND, SAGG, MINC.