By Ken Kapner “When financial markets come under pressure, vital functions such as the efficient allocation of capital and price formation become impaired.” BIS Quarterly Review, September 2022 Recently, there have been various signs of stress in the U.S. Treasury market. Coincidentally, there were two recent reports released by regulators…

By Ken Kapner What is “stagflation”? It’s when prices for goods and services are increasing while the economy is not growing. Are we headed towards it? Well, by any measure, inflation is a problem. For example, take a look at the consumer price index (CPI) going back to the early…

By Ken Kapner Introduction Economic fundamentals, supply chain issues, and energy prices have all contributed to interest rates moving higher. The Fed started raising rates in March of this year to combat the rise in inflation. The 10-year US. Treasury started the year around 1.53%, and at this writing is…

Author: Ken Kapner Over the last year, there has been a lot pf press regarding negative yield curves and the ability of an inverted curve to predict a recession. There are other indicators that market practitioners use to foretell a recession, such as the ISM purchasing managers’ report and consumer…

Author: Ken Kapner Negative convexity is a feature often found in callable bonds and mortgage backed securities. For this blog, the focus will be on agency MBS. Its source is the embedded option that allows for prepayment of principal prior to final maturity. This blog will examine negative convexity, how…

Author: Ken Kapner The Capital Markets are part of the global financial system that brings together investors and borrowers. Technically, the word capital implies a longer term, but the timing of when “short-term” actually becomes “long-term” has become a bit of a gray area. Generally speaking, short-term refers to money…

There were a lot of reasons for the 2008 credit crisis. Some of these included poor underwriting on personal mortgage loans, investors not doing their due diligence on investments, individuals lying on their mortgage applications, and government interference, to name just a few. Another cause resulted from credit rating agencies…

Technology has changed how the capital and financial markets operate. It is easy to identify some of these changes under the banner of Fintech (Financial Technology) including electronic trading, blockchain, peer to peer lending, robo-advisors, and crowdfunding. But what about capital markets and financial training? Technology has also made extensive…

Authors: Charles Gates and Ken Kapner Interest rate swaps denominated in US dollars (an agreement between two counterparties to exchange a fixed rate of interest for a floating rate of interest for a specific period of time calculated on a notional principal amount) have been in existence since the early…

Author: Charles Gates Negative interest rates have been observed many times in various markets, but over the past few years, have occurred more often than can be explained by a mere anomaly. We have no problem imagining why a government or company would want to issue bonds at a negative…

By Ken Kapner GFMI’s Newest Article The history of marijuana is one fraught with varying degrees of acceptance, illegality, utility, and recreation. As noted in GFMI’s most recent article, Marijuana Related Businesses (MRBs): High Hopes for a Fast-Growing Industry: In the United States, ten states have legalized pot for recreational…

In late 2017, GFMI’s President and CEO, Ken Kapner, wrote an article about the London Interbank Offered Rate (LIBOR), which is used by capital markets participants as the rate by which they would lend each other money. For a variety of reasons, including the realization that the rate was being…