The near-zero interest rate environment has been a support for the financial markets, but as the economy normalizes so will interest rates. While we expect the bull market in equities to continue, returns will likely be far more modest over the next 10 years. For bonds we can expect returns in the range of 2%-3%
Q: What indications did you observe that pointed to the recent market volatility storm? A: In our adaptive risk allocation framework, one of the key first level characterizations we make on markets is whether interest rates are normal or too low. Instead of rising as most expected, interest rates moved lower and lower this summer.
There were no changes from the previous month. Source: Columbia Management Investment Advisers, LLC. The chart reflects the views of the Global Asset Allocation team as of October 17, 2014. Asset classes are ranked from 1 (overweight) to 5 (underweight), with 3 representing a neutral allocation.
California is in its fourth year of drought, one of the worst in the past century. Key factors when assessing credit quality of water utilities are water supply and source diversity. Credit strength of California water utilities hinges on political willingness to raise rates. Potential impact on California-specific and national muni bond funds. California is
While QE proved very effective in reinforcing the Fed’s communication about short-term interest rates, there could be simpler ways to achieve the same outcome. The U.S. experience with QE suggests it would be effective in Europe. The Fed ended QE because it succeeded and that’s good news for investors. Last week the Federal Reserve announced
Markets are now asking what happens if growth slows again in the U.S. and/or weak and slowing growth in Europe, Russia and China drags down U.S. and U.K. growth? The stock market downturn is a reaction to changes in growth expectations and the volatility of that growth. Market assumptions for steady growth did not necessarily
In a highly indebted economy, there is no fixed cap on the level of interest rates. Any increase in interest rates must be consistent with tolerable debt service ratios, the existing stock of debt and private sector savings. It’s in this context where Fed officials’ delicate approach to the exit process looks most understandable. The