PORTFOLIO STRATEGY
Since the Federal Reserve cut its benchmark rate on September 18th by 50 basis points to 4.75%, incoming macroeconomic data has generally surprised on the upside and investors trimmed down expectations of further easing. However, the tide turned last week, as a light economic calendar in the U.S. focused almost exclusively on the persistent pains in the housing market. Housing is not getting any better and construction woes are impacting trucking and construction activity. Bond yields declined 22-46 basis points last week with yields on 3-month treasury bills falling below 4% again. The odds of Fed funds declining to 4.50% on October 31st currently stand at 74%, up from 32% two weeks ago.
Read the full article here: Weekly Market Strategy October 22, 2007(pdf-171kb)
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