Zach Pandl is a senior interest rate strategist for Columbia Management Investment Advisers, LLC, based in Minneapolis. Mr. Pandl focuses on research relating to the macroeconomy and government policy and their implications for interest rate markets. He chairs the Columbia Management Interest Rate Committee, which is responsible for formulating and articulating the firm’s view on interest rates in the U.S. and other developed markets. Mr. Pandl joined the firm in 2012 and has been a member of the investment community since 2006. Prior to joining Columbia Management, Mr. Pandl was senior economist at Goldman, Sachs & Co. in New York. There he was responsible for original research on the U.S. economy and interest rates and the development of proprietary analytical tools. Previously, he held positions at Nomura Securities and Lehman Brothers. Mr. Pandl earned his B.S. in economics from the University of St. Thomas and his Masters in economics from New York University.
Dovish comments by Fed officials lead us to believe that normalization in interest rates could take a more circuitous route. While the steady economic recovery makes higher yields inevitable, the path we take to get there is dependent on the Yellen Fed’s policy approach. We remain underweight duration, but are now less sure 3-5yr yields
In searching for explanations for the steep decline in the U.S. labor force participation rate analysts have rightly stressed the importance of retiring baby boomers. Increase in disability share accounts for 20-25% of the drop in the labor force participation rate since 2007 (vs ~45% for retirements). We expect this shift to be essentially permanent,
Compared to the market consensus, our views have been more negative on three key duration fundamentals. Following recent remarks by Fed Chair Janet Yellen, we are now less confident about how to read Yellen’s policy strategy. We are still expecting higher rates; however, we now have less conviction that 3-5yr Treasuries will continue to underperform on
The Fed’s communication for 2014 looks like the strongest type of forward guidance, one that clarifies the existing policy approach and backs up its statements. Current statements for 2015 and beyond are closer to the weakest type of forward guidance, which means they should be considered less credible. Look for the market’s heavy reliance on
The Fed’s communication for 2014 looks like the strongest type of forward guidance, one that clarifies the existing policy approach and backs up statements with some type of commitment. Current statements for 2015 and beyond are closer to the weakest type of forward guidance, a forecast that the central bank will behave in the future
At this week’s meeting, the Federal Open Market Committee looks likely to rework its forward guidance for short-term interest rates once again. We expect revised forward guidance to lean heavily on the idea of “headwinds”; this is a stand-in term for a low equilibrium real rate. We expect that the new guidance will make three main
Monetary policy is primarily about “gaps” not growth: the Fed is trying to reduce spare capacity in the economy, not bring about a rapid expansion per se. Despite concerns over cyclical weakness in labor force participation, the unemployment rate is sending similar signals as most other output gap proxies. The output gap improved despite a
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