Abby Joseph Cohen Is Worried About the Bond Market

Goldman strategist notes rise of short-term rates and projects a 3.6% 10-year Treasury.

Abby Joseph Cohen predicted the 1990s tech stock boom. Now she is forecasting a bond bust that will hurt investors.

The 35-year bond bull market may well be coming to a close, a jeremiad she shares with numerous other market analysts. Interest rates are on the rise, in part due to the Federal Reserve’s tightening on the short-term side. The threat of an inverted yield curve, which protects a recession, is growing.

“I’m more concerned about fixed income than equities,” the senior investment strategist for Goldman Sachs told Bloomberg Television. “There’s already been a notable rise in interest rates at the intermediate and long end. I think it will be increasingly difficult for fixed-income investors to do well.”

She said she expects the benchmark 10-year Treasury, now yielding around 2.95%, to rise to 3.9% by the end of 2019. The last time the 10-year was that high was 2011. That year, Standard & Poor’s downgraded the US because of a budget standoff between Congress, just taken over by the GOP, and Democratic President Barack Obama.

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Cohen cited the prospect of a trade war as a danger to the stock market, whose valuation she called “OK but not great.” The S&P 500’s price/earnings ratio is slightly over 17, about two percentage points higher than the historical average.

“Over the last year or two or three, the significant demand in U.S. equities has come from the countries where the president is now talking about slapping significant tariffs,” she said. “That can’t make those investors particularly friendly toward the United States.”

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New York State Common Announces Interim CIO

Anastasia Titarchuk will steer the huge pension fund during its chief search following Vicki Fuller’s retirement.


Anastasia Titarchuk will become 
interim CIO of  New York State
Common Retirement Fund

Deputy Chief Investment Officer Anastasia Titarchuk will replace the retiring Vicki Fuller as interim CIO of the $207.4 billion New York State Common Retirement Fund while it searches for a permanent replacement.

Comptroller Thomas P. DiNapoli, who announced Titarchuk’s appointment, thanked Fuller for her six years with the fund. He said that during her tenure, Fuller helped the pension fund reach “a record annual value and provided annualized investment returns that exceed our target rate.”

During her time at New York State Common, Fuller and her team harvested 8.75% in returns annually. The fund’s assumed rate of return is 7%.

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Fuller, who leaves at the end of the month, thanked DiNapoli for “his trust and support,” and had several parting words for the New York State pension fund’s staff as she passed the torch to Titarchuk.

“I will miss our inspiring and dedicated investment staff, but I am proud to leave the Fund in a strong position and secure in the knowledge that Anastasia is a talented and thoughtful leader,” said Fuller.

The comptroller also praised Titarchuk for her work as deputy CIO, a role she has held since 2015. She joined the fund in 2011 as director of absolute-return strategies. Prior to her time with the fund, Titarchuk worked a variety of Wall Street jobs in equity derivatives at JP Morgan Chase, Barclays Capital/Lehman Brothers, and Bank of America.

The fund will consider a national CIO search later this year.
New York State Common is the third-largest public pension fund in the US.

 

 

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