Economist (US Macro), RDQ Economics

Conrad DeQuadros

Economist (US Macro)

RDQ Economics

RDQ Economics provides global macroeconomic consulting services with an emphasis on U.S. economic fundamentals and monetary policy.  
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Our views are driven by consistent application of classical economic and monetary principles and has generated superior anticipation of changes in the stance of monetary policy and of movements in economic growth and inflation.
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The founders of RDQ Economics—John Ryding and Conrad DeQuadros—worked together on Wall Street for a decade, in the independent research space for nine years, and have experience in central banking at the Federal Reserve and the Bank of England.  John and Conrad have worked closely with fixed income, foreign exchange, and equity traders and portfolio managers, which has enabled their analysis and advice to be tailored to a clientele that is focused on trading and investment decisions.

Credit

With the third in our series of Macro Quick Hits outlining various aspects of our macro projections for 2019, we discuss the outlook for the Fed and the bond market.  Fed policy in 2018 turned out in line with the expectations were outlined a year ago; however, the market volatility of the last two months has clouded the outlook for rate hikes in 2019.

With the third in our series of Macro Quick Hits outlining various aspects of our macro projections for 2019, we discuss the outlook for the Fed and the bond market.  Fed policy in 2018 turned out in line with the expectations were outlined a year ago; however, the market volatility of the last two months has clouded the outlook for rate hikes in 2019.

The Outlook for the Fed and the Bond Market in 2019

Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


FX & Rates

<ul>
<li>Global Liquidity falling at fastest rate since 2007/08 Crisis</li>
<li> Over-zealous Central Banks are to blame</li>
<li> Squeeze evidenced by flat yield curves and negative ‘real’ term premia</li>
<li> In the US, the impact of reverse QE is equivalent to another ten rate hikes</li>
</ul>


Global Liquidity falling at fastest rate since 2007/08 Crisis
 Over-zealous Central Banks are to blame
 Squeeze evidenced by flat yield curves and negative ‘real’ term premia
 In the US, the impact of reverse QE is equivalent to another ten rate hikes


<ul>
<li>Latest US rate hike to 2.5% looks 'over-done'</li>
<li>Crashing Global Liquidity and skidding markets tell us policy is too tight</li>
<li>Evidencing the large negative print on 'real' 10-year term premia, we argue Fed Funds is already too high</li>
<li>US policy rates should fall by 100bp, since we estimate 'neutral' Fed Funds at 1.5%</li>
</ul>


Latest US rate hike to 2.5% looks 'over-done'
Crashing Global Liquidity and skidding markets tell us policy is too tight
Evidencing the large negative print on 'real' 10-year term premia, we argue Fed Funds is already too high
US policy rates should fall by 100bp, since we estimate 'neutral' Fed Funds at 1.5%


Hello The End? Why US Rates Could Fall Back to 1.5%

As was widely expected, the Federal Open Market Committee raised the fed funds rate target range by 25 basis points today to 2¼%–2½%.  The vote to raise rates was unanimous.  There were few surprises in the policy statement but the Fed did not remove the language referring to further gradual rate hikes and the Summary of Economic Projections pointed to two more hikes in 2019.

As was widely expected, the Federal Open Market Committee raised the fed funds rate target range by 25 basis points today to 2¼%–2½%.  The vote to raise rates was unanimous.  There were few surprises in the policy statement but the Fed did not remove the language referring to further gradual rate hikes and the Summary of Economic Projections pointed to two more hikes in 2019.

Fed Hiked Rates By 25 Basis Points and Signaled "Further Gradual Increases" Ahead

The November CPI report showed core CPI inflation picking up slightly, whereas the latest PCE prices data for October showed a slowing in the year-over-year core inflation rate and higher-frequency readings on both CPI and PCE prices have moderated.  While it appears that Fed officials still mostly view inflation as being close to their 2% target some have made references to the recent softer readings.  We do not think that underlying inflation is slowing, however, there is a technical reason why inflation rates may moderate in the near-term.

The November CPI report showed core CPI inflation picking up slightly, whereas the latest PCE prices data for October showed a slowing in the year-over-year core inflation rate and higher-frequency readings on both CPI and PCE prices have moderated.  While it appears that Fed officials still mostly view inflation as being close to their 2% target some have made references to the recent softer readings.  We do not think that underlying inflation is slowing, however, there is a technical reason why inflation rates may moderate in the near-term.

What's Next For U.S. Core Inflation Trends Following An As-Expected November CPI?

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US Treasury (10 Yr Generic) (GT10 GOVT)

The Outlook for the Fed and the Bond Market in 2019

With the third in our series of Macro Quick Hits outlining various aspects of our macro projections for 2019, we discuss the outlook for the Fed...

RDQ Economics

The Collapse of World Central Bank Money

Global Liquidity falling at fastest rate since 2007/08 Crisis Over-zealous Central Banks are to blame Squeeze evidenced by flat yield curves and...

Michael J. Howell

Hello The End? Why US Rates Could Fall Back to 1.5%

Latest US rate hike to 2.5% looks 'over-done' Crashing Global Liquidity and skidding markets tell us policy is too tight Evidencing the large...

Michael J. Howell

Fed Hiked Rates By 25 Basis Points and Signaled "Further Gradual Increases" Ahead

As was widely expected, the Federal Open Market Committee raised the fed funds rate target range by 25 basis points today to 2¼%–2½%. The vote to...

RDQ Economics

What's Next For U.S. Core Inflation Trends Following An As-Expected November CPI?

The November CPI report showed core CPI inflation picking up slightly, whereas the latest PCE prices data for October showed a slowing in the...

RDQ Economics

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