November 2020 – Monthly Commentary

It’s a paradox that as we wind down this very difficult year in which the pandemic ravaged so much of our day-to-day lives that the capital markets should close out the year on such a quiet note.  The bond market continues to benefit from the Federal Reserve’s open market buying and we have no expectation that the Fed will reduce their purchases anytime soon.  That’s especially the case given the upward pressure investors have put on 10-year Treasury note yields since early December.  The Fed continues to espouse the no inflation rhetoric citing government measures that show inflation continues to run below 2% in aggregate.  But we don’t subscribe to that view given the upwardly biased pricing we see in everyday goods and services.  Their desire to keep monetary policy excessively loose continues to benefit riskier assets as witnessed in equity prices and credit spreads.