Wall Street Webcasting Presents: Wells Fargo Securities: the Curve Flattener Continues: Geopolitical Risk Supports the Bid for Longer Treasuries

Wall Street Webcasting has prepared and provided for you an exclusive broadcast of Wells Fargo Securities own, Rich Gordon. Gordon is highly recognized for his weekly narrates regarding the fixed income strategy at Wells Fargo Securities (NYSE:WFC). This week, Rich Gordon discusses the Geopolitical instability in Europe and the Middle East in the month of July which caused divergence in the performance in financial assets in the United States.

Every part of the globe is experiencing major economic change. The VIX Index is up 2.30 basis points from 10.32 in early July. Gordon states if the situations in Israel and Ukraine stay the same and do not get resolved, the VIX Index in July will be the lowest for the year. Gordon points out that the situation in Ukraine will most likely cause more economic sanctions against Russia, which in turn will cause the European GDP to suffer since Russian is a major supplier of Fossil Fuels and Raw Materials to Europe.

The Geopolitical instability has pushed the yield on the 30-year bond to as low as 3.25%, a fresh low for this year and the weakest point since June 2013. Gordon reviews the charts of the treasury yields which demonstrate that the trend towards a flatter curve will continue unless there is a change in the current environment.

Gordon goes on to discuss the fixed income assets and that we should be aware that high yield as a sector had a rough month. The recent show of high yield is a deviation from the spread tightening in 2014, however, spreads started to snap back last week. The widening of high yield spreads that went on for the month of July suggests that there is a limit to how much risk fixed income investors are prepared to take. If the spreads continue to improve, Gordon proposes that it will bring in institutional buyers who have plenty of cash but are waiting for a better entry point.

To hear a more in depth explanation of recent trading patterns, and what other affects the late economic data may have, please tune into Wells Fargo Securities’ latest video.

Please visit the following link to view the video:

http://www.wsw.com/webcast/wav/