Fixed Income Specialist at Charles Schwab
Contributor's Links: Smiles An Hour

During the course of his long career in the fixed income markets Mr. Byrne was responsible for: Trading of preferred stock, corporate bonds, (high grade and high yield) mortgage-backed securities, U.S. treasury securities, GSE debt, International debt securities (sovereign and corporate) and ... more

ALL CONTRIBUTIONS

The Fed, The Curve And Credit Markets
The capital markets, particularly the equity and high yield debt markets, fret that President Trump will appoint a Fed Chair who is too hawkish and will combat any and all inflation created by fiscal and tax policy reforms.
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E On The Street Hypotheses' Burning, As The Slow-Growth Economy Keeps Turning
After largely discounting a slow first-quarter of the year, the strategist and analyst communities were crowing about an expected second-quarter rebound.
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E U.S. Economy Quests For Economic Escape Velocity
The recent strength in economic data has many pundits, investors and strategists downright giddy. This giddiness may turn out to be warranted, but the U.S. economy has experienced several failures-to-launch in the quest for economic escape velocity.
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E Selling Pressure In U.S. Bonds Came From Europe
It looks like much of the early selling pressure in U.S. bonds came from Europe, where higher-than-expected inflation pressures sent European sovereign yields higher and may have attracted some fixed income capital from U.S. Treasuries.
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E Higher Interest Rates In 2017?
I believe the story for 2017 will be one of higher interest rates, but investors and market participants might be surprised at just how low next year’s higher rates are and that the yield curve is not as steep as many pundits forecast.
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E A Bond Market Turkey Call
Municipal bonds have come under pressure as investors, with the urging of some wealth management firms and their models, have pulled money from the municipal market in anticipation of lower taxes under a Trump presidency.
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Comments

Latest Comments
Higher Interest Rates In 2017?
2 years ago

The next best thing to a perpetual issue. Got to love perpetual preferreds, right? Borrow money at low rate and never have to repay principal. Maybe the government should create a similar structure?

In this article: TNX
Janet’s Got A Squeezebox, Kuroda Can’t Sleep At Night
2 years ago

Actually, long UST yields crept higher after QE1 and QE2. The first two iterations of the Fed's QE bond buying focused on buying securities with maturities two years and in. This was similar to lowering the Fed Funds Rate. Accordingly, the yield curve steepened with short yields falling and long yields rising (anticipating inflation from increased bank lending from the bull steepening yield curve). Markets did not anticipate the effects of financial regs which curtail bank lending and demographics which reduces the need for credit.

After lending did not increase from a steep curve (banks were not going to be able to extend home mortgage credit to anyone without pristine credit profile), the Fed started twisting in the summer of 2011. The goal was to drive down mortgage benchmarks, thereby lowering mortgage rates in the hope of luring well-qualified borrowers off the sidelines. This worked, to some degree, as mortgages for home purchases and refinancing are up among upper-tier borrowers.

The problem is that many people believe that it is only a matter of time before the old normal returns. In reality, each economic era is different. We never "go back." Notice I said "era" and not cycle. We are in a new economic era not simply a new economic cycle.

Twisted Sister
2 years ago

Helicopter money, like any monetary stimulus without fiscal policy follow-through, is temporary. It is only a matter of time before more monetary stimulus is needed. Hence the multiple decades of falling policy rates just to try and generate 3.0% GDP. Even this has not succeeded since the tech bubble.

As I wrote in a report today, Japan my have provided a glimpse into the future of developed economies, perhaps the global economy, for the past two decades.

The world is flattening. A rising foreign middle class does not merely mean increased demand for goods, but also increased supply of and competition for labor. Globalization (any form of competition) is inherently disinflationary. This is true of labor costs as well as the prices of goods and services.

In this article: FXY, UUP
Twisted Sister
2 years ago

I too am resistant to more monetary stimulus, unless there is fiscal and regulatory reforms. However, if the people do not wish such changes (based on their choices at the polls) I do not think helicopter money should be considered. Cant get a washing machine to fly, no matter how much fuel you pump into it. That is the EU, Japanese and, to a lesser extent, the U.S. economies.

In this article: FXY, UUP
Two Sets Of Retail Sales, But Only One Economic Trend
3 years ago

This is not difficult. Online sales were a major factor in juicing the data. It was gift card sales. Many consumers spend the gift cards they get in for Christmas in January. This has been a trend in recent years. February will come back to earth.

Why Japan Went NIRP: No More Doubts About QQE
3 years ago

Recovery in Japan starts when there is structural reform. However, Japanese consumers/electorate, have adapted to low growth, low rates and low inflation. They are happy with the status quo. One will not fix something they do not believe to be broken. They same is true of Europe.

US Bond Market Week In Review: The Bond Market Sees Weak Growth
3 years ago

Although the bond market does indeed see weak growth, it is mostly concerned with low inflation. Because inflation and growth USUALLY go hand in hand, there is a common misconception that the bond market prices to growth. In reality it prices for inflation. This is how we saw soaring long-term rates in the late 70s, when the U.S. economy was moribund. This is also why we saw fairly low rates during the past two expansions. When inflation and growth diverge, the long end of the curve has priced to inflation.

This is logical because the very reason investors usually demand higher yields for longer dated bonds is due to the erosion of purchasing power caused by inflation. If we saw 3.0% GDP and 1.0% inflation, long rates would remain fairly low. If we saw 0.0% GDP and 3.5% inflation, long rates would soar. History supports this as well.

Yield Curve Flattening?
3 years ago

If you are a true income investors and want to position for a flatter yield curve, barbell your portfolio. A barbell is also advantageous because the bulk of the Fed's QE holdings are on the "belly" of the curve.

In this article: FLAT, IEF
M-M-M-My Kuroda: What The BOJ Is Up To
3 years ago

It is not whether or not they should. It is whether they can. Central banks have cyclical tools. I.E they can encourage more aggressive lending, borrowing and/or investing. The cost of capital is not the problem. Structural demand for credit is. The Fed has a very string hammer, but it is of little use when the problem is a screw.

M-M-M-My Kuroda: What The BOJ Is Up To
3 years ago

The Fed is not only out of tools, it does not should not have the right tools. Headwinds to growth are mainly structural in nature. Fiscal policy mist be changed to increase per capita consumption without encouraging or requiring large sums of household debt.

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The Great Transitory Myth
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The Bond Squad Difference
Each portfolio I construct is done for the benefit of each investors. No two portfolios are identical. Portfolios tend to be as unique as the investor for whom it is built.

Work Experience

Fixed Income Specialist
Charles Schwab
November 2017 - Present (1 year 4 months)

Charles SchwabLocation: Jersey City, NJ

Director of Fixed Income
Wealth Strategies & Management LLC
November 2012 - Present (6 years 5 months)

Member FINRA/SIPC. For hyperlinks to FINRA and SIPC, please refer to the website section above. Third party posts found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness. 

BondSquad
Executive Officer
March 2012 - Present (7 years 1 month)

Fixed Income Strategist and Portfolio Manager.

Citi
Director
April 1988 - December 2011 (24 years 1 month)

Fixed income portfolio constructuon , investment strategy, fixed income security analysis. Deep understanding of the fixed income markets.

Education

City University of New York-College of Staten Island
1985 / 1989

Publications