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Section: Thought Leadership

Thought Leadership

Monday Morning O'Malley

A weekly take on the economy and the market, from Dave O’Malley, Chairman & Chief Executive Officer of Penn Mutual Asset Management.

  • Oil Prices and Treasury Yields Fall?
    May 29, 2018
    Last week saw a reversal in two market trends that have been occurring for the past several months: increasing oil prices and treasury yields.
  • Is the Secular Bull Market Over for Bonds?
    May 21, 2018
    pinions on the bond market continue to grow louder as several market prognosticators claim that the multi-decade bull market for bonds is over due to some key technical indications being exceeded.
  • Inflation Expectations and Interest Rates
    May 7, 2018
    As expected last week, the Federal Reserve held interest rates unchanged, but did revise its post-meeting statement to reinforce that inflation has moved closer to its 2% target.
  • 10-Year Treasury Rates Increase to 3%
    April 30, 2018
    Last week the 10-year Treasury rate pierced the 3% level before falling back to 2.96% by the end of the week. This marks the first time the 10-year Treasury has been above 3% since 2013.
  • Bond Yields Push Higher
    April 23, 2018
    Last week saw bond yields push higher. The 10-year U.S. Treasury ended the week at 2.96%, a new high yield for the year.
  • Stay Focused on the Fundamentals
    April 16, 2018
    The last few weeks, a significant amount of headline news distracted market participants’ attention from the fundamentals.
  • Markets Look for Momentum after a Volatile Q1
    April 2, 2018
    Equity markets had a volatile quarter, and their weakest in the last six, driven by concerns about rising interest rates, potential trade conflicts and valuation concerns.
  • Fed Meeting Takes Center Stage
    March 19, 2018
    This week’s Federal Reserve (Fed) meeting, the first for new Chairman Jerome Powell, will be closely scrutinized.
  • Longer Term View on U.S. Interest Rates
    February 26, 2018
    Given my bearish near-term view on U.S. Treasury bonds, I have recently been asked several times, where do interest rates go over the longer term?
  • What Lies Ahead After a Volatile Week for Stocks
    February 12, 2018
    Several technical factors caused significant volatility in the equity markets last week. In addition to an unwinding of low volatility positions, the equity market struggled with the implication of higher interest rates.
  • Recoveries Don’t Die of Old Age
    February 5, 2018
    Last week stocks fell the most they have in two years – ending with a 666 point decline on Friday. It was the sixth-largest point decline in the Dow Jones Industrial Average’s history.
  • Big Week for Bonds Ahead
    January 29, 2018
    With mounting talk of a bear market ahead for U.S. Treasuries, the market has to digest several key events this week.
  • Interest Rates Move Higher
    January 22, 2018
    The 10-year Treasury ended last week at 2.66% – its highest level since 2014. A combination of factors are pushing interest rates in the U.S. higher to start the year.
  • Predictions for the Year Ahead
    January 2, 2018
    Happy 2018! Last year was an eventful one for the markets as optimism about growth and pro-business policies pushed markets higher.
  • Economic Data Overshadowed by Events in Washington
    December 4, 2017
    The events in Washington overshadowed the release of solid economic data last week. With consistent economic data emerging over the last few weeks, markets have shifted their primary attention to the events in Washington.
  • Stocks Hit New Highs
    November 27, 2017
    Optimism around ongoing economic momentum spurred by potential tax reductions kept concerns about higher valuations at bay and elevated a market environment already benefitting from improving corporate earnings
  • Fed Minutes and Tax Reform
    November 20, 2017
    This holiday-shortened week is highlighted by the release of the minutes from the most recent Federal Open Market Committee (FOMC) meeting and any potential updates regarding the progress of tax reform legislation.
  • Inflation Data this Week to Remain Subdued
    November 13, 2017
    Tuesday’s release of the Producers Price Index (PPI) and Wednesday’s release of the Consumer Price Index (CPI) will be the economic data highlights this week.
  • Oil Prices Continue to Climb Higher
    November 6, 2017
    Last week Jerome Powell was nominated as the next Federal Reserve chairman. In addition to this key announcement other market-moving data, including the employment report, tax bill and treasury refunding, failed to create a significant move in the stock or bond markets.
  • Critical Week for Bonds
    October 30, 2017
    This week is a critical week for the bond market as 10-year Treasuries yields are trading above the 2.4% level that has been cited by Bill Gross of Janus as signaling a bear market.
  • And the Next Fed Chair is?
    October 23, 2017
    Stocks rallied and bond yields rose last week on optimism for the Republicans to successfully pass tax reform and on strength in third quarter corporate earnings.
  • Inflation Data Disappoints
    October 16, 2017
    The Consumer Price Index (CPI) increased by 0.5% for the month of September but was lower than expected. Despite a tight labor market, strong economic conditions and increasing commodity prices, inflation has remained lower than expected throughout 2017.
  • Underlying Employment Strength
    October 9, 2017
    Last week’s September employment report showed weakness in the headline jobs gained number but significant underlying strength in other measures.
  • Fed Continues Hawkish Tone
    September 25, 2017
    The stock market held near record levels and interest rates were stable after the Federal Reserve (Fed) announced its much anticipated plan to shrink its balance sheet last week.
  • Stocks Make a New High
    September 18, 2017
    The S&P 500 closed above the 2,500 mark for the first time on Friday. The markets ended a strong week of gains driven by continued favorable conditions for economic growth and the prospects for potentially bipartisan action coming out of Washington.
  • Hurricane Recovery and Economic Impact
    September 11, 2017
    The one-two punch of Hurricanes Harvey and Irma has impacted so many in Texas, Florida and throughout the Southern part of the U.S. We keep all of those impacted in our thoughts and wish them a speedy recovery.
  • Unexpectedly Weak Employment Report
    September 5, 2017
    The nuclear test by North Korea has brought geopolitical uncertainty to a new level. As I have previously written, it is very hard to trade geopolitical risk so I prefer to stay focused on fundamentals.
  • Treasury Auctions and Inflation Data
    August 7, 2017
    Last week’s employment data confirmed the strength of the jobs market with 209,000 new jobs added during July versus an expected 180,000.
  • Earnings Heat Up This Week
    July 17, 2017
    Second quarter earnings will receive significant attention this week, as stocks pushed to new highs on the S&P 500 Index last week.
  • Bond Yields Rise Around the Globe
    July 10, 2017
    Bond yields have been rising around the globe for the last few weeks as central bankers discuss the continued normalization of monetary policy.
  • Waiting for the Healthcare Vote
    June 26, 2017
    The week ahead has limited economic data. Durable goods were down 1.1% for May and likely fell on weaker demand for airplanes.
  • Beware of a Flattening Yield Curve
    June 19, 2017
    In a much anticipated move last week, the Federal Reserve (Fed) increased short-term interest rates by 25 basis points (bps).
  • Sell in May and Go Away?
    May 30, 2017
    As we reach the end of May, I was thinking of the old trading adage “sell in May and go away,” or the recommendation to sell stocks in May and buy them back in November, therefore avoiding the historic volatility that has occurred in the June to October period.
  • Staying Focused on the Big Picture
    May 22, 2017
    Over the past few months, I have been asked many times how to factor the news cycle and developments in Washington into market expectations.
  • Stocks Rally on French Election
    April 24, 2017
    The results of the first round of French elections sent stocks around the world higher in early trading on Sunday. Emmanuel Macron and Marine Le Pen will advance to the second round of voting on May 7.
  • The First Week of the Second Quarter Expected to be Busy
    April 17, 2017
    Geopolitical issues took center stage last week as stocks fell again and Treasury bond yields dropped to their lowest level in 2017, as tensions surrounding North Korea and with Russia over the U.S. attack in Syria had market participants worried about the impact of the Trump administration’s domestic agenda.
  • Stocks Pull Back on Trump Administration Policy Concerns
    March 27, 2017
    Last week was highlighted by the Republicans’ failure to repeal and replace the Affordable Care Act (ACA). The policy setback was not well received by stocks, as the U.S. markets suffered both its worst day and week in 2017.
  • Fed Takes a Dovish Tone While Raising Rates
    March 20, 2017
    As expected, the Federal Reserve (Fed) raised the Federal Funds rate by 25 basis points (bps) last week. The increase came with a dovish tone regarding the pace of future increases, and sent risk markets soaring and treasury yields lower following the announcement.
  • The Value Trap
    February 21, 2017
    In this short trading week, I will be watching to see if we get any more information on the Federal Reserve’s (Fed) current thinking when they release the January meeting minutes this Wednesday.
  • Yellen and Inflation Highlight the Week Ahead
    February 14, 2017
    U.S. stocks reached new highs last week amid the continued slow process of cabinet appointments in Washington and the heightened noise associated with the new administration.
  • What is the Consensus Market View?
    February 6, 2017
    Last week was fairly uneventful from a market data perspective, as all eyes continued to be glued on Washington and the almost constant coverage of the Trump administration.
  • Central Banks Take Center Stage
    January 30, 2017
    Stocks made new highs last week as the Dow Jones Industrial Average broke above the 20,000 level on optimism for pro-growth policies from the Trump administration.
  • Economic Data Will Drive the Markets in the Week Ahead
    January 23, 2017
    The inauguration stole the headlines last week, and I expect it will be no different in the week ahead. With the anticipated repeal of The Affordable Care Act, cabinet appointments and the planned meetings with world leaders, including U.K., Canada and Mexico, the activities in Washington will continue to keep the media’s attention.
  • The Market and Economic Impact of the Trump Administration
    January 17, 2017
    This week has several key market-moving events, including the European Central Bank (ECB) meeting, potentially impactful dialog coming out of the World Economic Forum in Davos and key economic data in the both the U.S. and around the globe.

2016 Archives

  • December 2016

    • Busy Week with the Fed Announcement and U.S. Economic Data
      December 12, 2016
      This week will be very active, with the Federal Reserve (Fed) meeting for the final time in 2016 and significant economic data releases—all of which will be closely scrutinized given the stock market hitting all time highs.
  • November 2016

    • Uncertainty for Stocks
      November 28, 2016
      Over the past few months, I have had a strong conviction that bond yields in the U.S. were going to rise due to both fundamental and technical factors.
    • Improving Economic Data
      November 21, 2016
      U.S. economic data continues to improve and last week’s strong reports were no exception, suggesting an uptick in fourth quarter growth and overall U.S. economic expansion.  
    • Fiscal Policy Uncertainty
      November 14, 2016
      Over the next few weeks the details and implications of the Trump Presidency will come into greater focus.
    • Tightening Labor Market
      November 7, 2016
      The economic highlight of last week was the October employment report. The report confirmed the continued tightening of the labor market.
  • October 2016

    • Employment Continues to Improve
      October 10, 2016
      I decided to wait until after the Presidential debate to write this week’s post, as the potential for something totally unexpected and market-moving seemed very high.
    • Deutsche Bank Fears Grip Global Markets
      October 3, 2016
      It seemed like every day last week the top headline in the financial news was focused on the problems at Deutsche Bank and the potential implications for the global markets.
  • September 2016

    • The Fed’s Dilemma
      September 19, 2016
      On Wednesday around 2:00 p.m. ET, we will find out the Federal Reserve’s (Fed) decision to either keep interest rates unchanged or increase them by 25 basis points.
    • Complacency Broken
      September 12, 2016
      For a few weeks now, I have been writing about the complacency in markets surrounding global economic conditions and monetary policy.
  • August 2016

    • 3-month LIBOR Increases
      August 15, 2016
      Not much has changed in the last few weeks for the markets. Economic data is mixed in the U.S., and concerns still exist about global economic conditions.
    • U.S. Employment Trends Remain Favorable
      August 8, 2016
      The July payroll report on U.S. employment backed up the strong June report with another favorable sign for hiring. July non-farm payrolls rose by 255,000, with a net positive 18,000 positive revision. The unemployment rate held steady at 4.9%.
  • July 2016

    • FOMC Expected to Keep Rates Unchanged
      July 25, 2016
      This week’s Federal Open Market Committee (FOMC) meeting will provide insight into the policy committee’s thinking about the post-Brexit economy.
    • U.S. Economic Data Supports the Market
      July 18, 2016
      Despite all of the political, geo-political and social tumult in the news recently, U.S. economic data has remained surprisingly robust.
  • June 2016

    • Brexit Surprise
      June 27, 2016
      I had an interesting perspective this past week on the reaction to the Brexit vote as I was in Scotland with some of Penn Mutual Life’s top advisors.
    • Waiting for the Brexit Vote
      June 20, 2016
      After last week’s Federal Open Market Committee (FOMC) meeting, in which the Fed lowered its longer-term expectation for interest rates, we now await the upcoming vote in the U.K. on Brexit.
    • Markets and Uncertainty Are a Bad Combination
      June 13, 2016
      U.S. stocks traded off recent highs and bond yields fell again last week. After the disappointing employment report, 10-year Treasury yields have now fallen by 70 basis points this year.
  • May 2016

    • Waiting for Janet Yellen
      May 31, 2016
      Janet Yellen kept trading desks fully staffed on Friday, before the holiday weekend.
    • Waiting for Janet Yellen
      May 23, 2016
      The Federal Reserve (Fed) minutes from the April meeting, released last week, surprised the market with the Fed’s insinuation that a June increase in interest rates may be warranted based on economic data.
  • April 2016

    • Insights on the Market and Economy
      April 11, 2016
      Last week was relatively uneventful from a market perspective. The factors that have been driving the market recently continue to stay front and center for market participants.
    • Dovish Fed and Strong Employment
      April 4, 2016
      The highlights of last week were the dovish comments by Federal Reserve Chair Janet Yellen and the solid March employment report.
  • March 2016

    • Economy, Employment and Inflation
      March 28, 2016
      As we approach the end of a volatile first quarter, the number one question I have been receiving recently is, “Where do markets and the economy go from here?
    • Fed Reduces Expectations for Rate Increases
      March 21, 2016
      As anticipated, the Federal Reserve (Fed) reduced expectations for future interest rate increases at its meeting last week. Risk markets rallied on the news. The Fed's dovish change in tone puts the market in an interesting dilemma.
  • February 2016

    • U.S. Growth Revised Higher but Market Volatility Expected to Continue
      February 29, 2016
      Last week, fourth quarter GDP was revised higher from an initial 0.7% to 1.0%. I expect first quarter GDP to accelerate to 2.5%. Volatility should pick up this week, with some key economic data being released and more focus on China and a potential “Brexit.”
    • Is Inflation Good for Equities?
      February 22, 2016
      Last week saw a continuation of the uptick in the stock market that began Friday of the week before. The S&P 500 Index is up approximately 5% from its recent low and is no longer in a correction.
    • Was Friday’s Relief Rally Sustainable?
      February 16, 2016
      Last week was another difficult week for stocks despite Friday’s sharp rally. Global equities were under pressure for the first four days of the week, as energy prices continued to decline and Janet Yellen provided no indication that the Fed was changing its direction.
  • January 2016

    • Market Prices or Economic Fundamentals?
      January 25, 2016
      After another volatile week for the financial markets, equities and energy prices ended up after starting the week by marking new lows for the year.
    • Stock Valuations and the Fed
      January 18, 2016
      Last week, I was asked to comment on an article in the Wall Street Journal that suggested investors have been accepting higher levels of risk in their investments in a quest for higher returns. The article held that this means many assets are overpriced, and the Fed’s actions in raising interest rates will cause those prices to fall.
    • 2016 Off to a Shaky Start
      January 11, 2016
      The first few trading days of 2016 have seen U.S. equities put in their worst performance to start a year ever and their worst week since 2011.
    • 2015 Lessons Learned: 3 Takeaways for Investors
      January 4, 2016
      Remarkably, despite numerous periods of extreme volatility across financial markets during 2015, the S&P 500 and 10-year Treasury yields will end the year almost exactly where they started.

2015 Archives

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