Sober Look

The US Phillips curve


We’ve received some questions about the so-called Phillips curve – the relationship between inflation and unemployment. While there are a number of ways to look at the Phillips curve, the services inflation measures are more suitable than the broader p…

The low volatility paradigm and return expectations


What happens in an environment – such as the one we are currently in – that is characterized by prolonged periods of low volatility? One of the effects of diminished price swings is the decline of return expectations. As an example, the chart below shows the spread demanded by investors in US high yield bonds vs. the volatility of total returns in that market…