Image alt tag

Error!

X

There was a problem contacting the server. Please try after sometime.

Sorry, we are unable to process your request.

Error!

X

We're sorry, but the Insights and Intelligence Tool is temporarily unavailable

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Error!

X

We're sorry, but the Literature Center checkout function is temporarily unavailable.

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Tracked Funds

You have 0 funds on your mutual fund watch list.

Begin by selecting funds to create a personalized watch list.

(as of 12/05/2015)

Pending Orders

You have 0 items in your cart.

Subscribe and order forms, fact sheets, presentations, and other documents that can help advisers grow their business.

A verification Email Has Been Sent

Close

An email verification email has been sent to .
Follow the instructions to complete the email validation process.

I have not received my verification email

Check your SPAM mailbox and make sure that twelcome@lordabbett.com is allowed to send you mail.

I'm still having trouble

If you're still having trouble verifying your email address. feel free to contact us.

1-888-522-2388
clientservices@lordabbett.com


OK

We're sorry. We found no record of the email address you provided.

Close

Register For a LordAbbett.com Account
Using Your Email Address.

  • Registered Financial Advisors gain access to:
  • Our data mining tool, Insight & Intelligence
  • Best in-class practice management content
  • Educational events, videos and podcasts.
  • The Lord Abbett Review - Subscribe now!

Registered but Having Problems?

If you believe you are registered and are having problems verifying your email address, feel free to contact us.

1-888-522-2388 clientservices@lordabbett.com

Terms & Condition

X

These Terms of Use ("Terms of Use") are made between the undersigned user ("you") and Lord, Abbett & Co. ("we" or "us"). They become effective on the date that you electronically execute these Terms of Use ("Effective Date").

A. You are a successful financial consultant that markets securities, including the Lord Abbett Family of Funds;

B. We have developed the Lord Abbett Intelligence System (the "Intelligence System"), a state of the art information resource that we make available to a limited community of broker/dealers through the Internet at a secure Web site (the "LAIS Site"); and

C. We wish to provide access to the Intelligence System to you as an information tool responsive to the demands of your successful business pursuant to these Terms of Use. Accordingly, you and we, intending to be legally bound, hereby agree as follows:]

1. Overview. · Scope. These Terms of Use (which we may amend from time to time) govern your use of the Intelligence System. · Revisions; Changes. We may amend these Terms of Use at any time by posting amended Terms of Use ("Amended Terms of Use") on the LAIS Site. Any Amended Terms of Use will become effective immediately upon posting. Your use of the Intelligence System after any Amended Terms of Use become effective will be deemed to constitute your acceptance of those Amended Terms of Use.We may modify or discontinue the Intelligence System at any time, temporarily or permanently, with or without notice to you. Purpose of the Intelligence System. The Intelligence System is intended to be an information resource that you may use to contribute to your business research. The Intelligence System is for broker/dealer use only; it is not to be used with the public in oral, written or electronic form. The information on the Intelligence System and LAIS Site is for your information only and is neither the tax, legal or investment advice of Lord Abbett or its third-party sources nor their recommendation to purchase or sell any security.

2. Your Privileges. · Personal Use. Your use of the Intelligence System is a nontransferable privilege granted by us to you and that we may deny, suspend or revoke at any time, with or without cause or notice. · Access to and Use of the Intelligence System. The User ID and password (together, an "Access ID") issued by us to you (as subsequently changed by you from time to time) is for your exclusive access to and use of the Intelligence System. You will: (a) be responsible for the security and use of your Access ID, (b) not disclose your Access ID to anyone and (c) not permit anyone to use your Access ID. Any access or use of the Intelligence System through the use of your Access ID will be deemed to be your actions, for which you will be responsible. · Required Technology. You must provide, at your own cost and expense, the equipment and services necessary to access and use the Intelligence System. At any time, we may change the supporting technology and services necessary to use the Intelligence System. · Availability. We make no guarantee that you will be able to access the Intelligence System at any given time or that your access will be uninterrupted, error-free or free from unauthorized security breaches.

3. Rights in Data. Our use of information collected from you will be in accordance with our Privacy Policy posted on the LAIS Site. Our compliance with our Privacy Policy will survive any termination of these Terms of Use or of your use of the Intelligence System.

4. Your Conduct in the Use of the Intelligence System. You may access, search, view and store a personal copy of the information contained on the LAIS Site for your use as a broker/dealer. Any other use by you of the Intelligence System and the information contained on the LAIS Site these Terms of Use is strictly prohibited. Without limiting the preceding sentence, you will not: · Engage in or permit any reproduction, copying, translation, modification, adaptation, creation of derivative works from, distribution, transmission, transfer, republication, compilation or decompilation, reverse engineering, display, removal or deletion of the Intelligence System, any portion thereof, or any data, content or information provided by us or any of our third-party sources in any form, media or technology now existing or hereafter developed, that is not specifically authorized under these Terms of Use.

· Remove, obscure or alter any notice, disclaimer or other disclosure affixed to or contained within the Intelligence System, including any copyright notice, trademark and other proprietary rights notices and any legal notices regarding the data, content or information provided through the Intelligence System.

· Create a hyperlink to, frame or use framing techniques to enclose any information found anywhere on the LAIS Site without our express prior written consent.

· Impersonate any person, or falsely state or otherwise misrepresent his or her affiliation with any person in connection with any use of the Intelligence System.

· Breach or attempt to breach the security of the Intelligence System or any network, servers, data, or computers or other hardware relating to or used in connection with the Intelligence System; nor (b) use or distribute through the Intelligence System software or other tools or devices designed to interfere with or compromise the privacy, security or use of the Intelligence System by others or the operations or assets of any person.

· Violate any applicable law, including, without limitation, any state federal securities laws. 5. Your Representations and Warranties. You hereby represent and warrant to us, for our benefit, as of the time of these Terms of Use and for so long as you continue to use the Intelligence System, that (a) you are, and will continue to be, in compliance with these Terms of Use and any applicable laws and (b) you are authorized to provide to us the information we collect, as described in our Privacy Policy.

6. Disclaimer of Warranties.

· General Disclaimers.

THE INTELLIGENCE SYSTEM, THE LAIS SITE AND ALL DATA, INFORMATION AND CONTENT ON THE LAIS SITE ARE PROVIDED "AS IS" AND “AS AVAILABLE” AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND. WITHOUT LIMITING THE PRECEDING SENTENCE, LORD ABBETT, ITS AFFILIATES, AGENTS, THIRD-PARTY SUPPLIERS AND LICENSORS, AND THEIR RESPECTIVE EMPLOYEES, CONTRACTORS, DIRECTORS, OFFICERS AND SHAREHOLDERS (COLLECTIVELY, THE “LORD ABBETT GROUP”) EXPRESSLY DISCLAIM ALL WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NONINFRINGEMENT. YOU EXPRESSLY AGREE THAT YOUR USE OF THE LAIS SITE, THE INTELLIGENCE SYSTEM, AND THE DATA, INFORMATION AND CONTENT PRESENTED THERE ARE AT YOUR SOLE RISK AND THAT THE LORD ABBETT GROUP WILL NOT BE RESPONSIBLE FOR ANY (A) ERRORS OR INACCURACIES IN THE DATA, CONTENT AND INFORMATION ON THE LAIS SITE AND THE INTELLIGENCE SYSTEM OR (B) ANY TERMINATION, SUSPENSION, INTERRUPTION OF SERVICES, OR DELAYS IN THE OPERATION OF THE LAIS SITE OR THE INTELLIGENCE SYSTEM.

· Disclaimer Regarding Investment Research.

THE INTELLIGENCE SYSTEM INCORPORATES DATA, CONTENT AND INFORMATION FROM VARIOUS SOURCES THAT WE BELIEVE TO BE ACCURATE AND RELIABLE. HOWEVER, THE LORD ABBETT GROUP MAKES NO CLAIMS, REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY, TIMELINESS, COMPLETENESS OR TRUTHFULNESS OF SUCH DATA, CONTENT AND INFORMATION. YOU EXPRESSLY AGREE THAT YOU ARE RESPONSIBLE FOR INDEPENDENTLY VERIFYING YOUR INVESTMENT RESEARCH PRIOR TO FORMING YOUR INVESTMENT DECISIONS OR RENDERING INVESTMENT ADVICE. THE LORD ABBETT GROUP WILL NOT BE LIABLE FOR ANY INVESTMENT DECISION MADE BY YOU OR ANY OTHER PERSON BASED UPON THE DATA, CONTENT AND INFORMATION PROVIDED THROUGH THE INTELLIGENCE SYSTEM OR ON THE LAIS SITE.

· Survival.

THIS SECTION 6 SHALL SURVIVE ANY TERMINATION OF THESE TERMS OF USE OR YOUR USE OF THE INTELLIGENCE SYSTEM..

7. Limitations on Liability.

NONE OF THE MEMBERS OF THE LORD ABBETT GROUP WILL BE LIABLE TO YOU OR ANY OTHER PERSON FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, SPECIAL OR EXEMPLARY DAMAGES (INCLUDING LOSS OF PROFITS, LOSS OF USE, TRANSACTION LOSSES, OPPORTUNITY COSTS, LOSS OF DATA, OR INTERRUPTION OF BUSINESS) RESULTING FROM, ARISING OUT OF OR IN ANY WAY RELATING TO THE INTELLIGENCE SYSTEM, THE LAIS SITE OR YOUR USE THEREOF, EVEN IF THE LORD ABBETT GROUP HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION 7 WILL SURVIVE ANY TERMINATION OF THESE TERMS OF USE OR YOUR USE OF THE INTELLIGENCE SYSTEM.

8. Miscellaneous Provisions.

· Governing Law. This Agreement will governed by and construed in accordance with the laws of the State of New York, without giving effect to applicable conflicts of law principles.

THE UNIFORM COMPUTER INFORMATION TRANSACTIONS ACT OR ANY VERSION THEREOF, ADOPTED BY ANY STATE, IN ANY FORM ("UCITA") WILL NOT APPLY TO THESE TERMS OF USE. TO THE EXTENT THAT UCITA IS APPLICABLE, THE PARTIES HEREBY AGREE TO OPT OUT OF THE APPLICABILITY OF UCITA PURSUANT TO THE OPT-OUT PROVISION(S) CONTAINED THEREIN.

The Intelligence System is not intended to be used by consumers, nor are the consumer protection laws of any jurisdiction intended to apply to the Intelligence System. You agree to initiate and maintain any action, suit or proceeding relating to these Terms of Use or arising out of the use of the Intelligence System exclusively in the courts, state and federal, located in or having jurisdiction over New York County, New York.

YOU HEREBY CONSENT TO THE PERSONAL JURISDICTION AND VENUE OF THE COURTS, STATE AND FEDERAL, LOCATED IN OR HAVING JURISDICTION OVER NEW YORK COUNTY, NEW YORK. YOU AGREE THAT YOU WILL NOT OBJECT TO A PROCEEDING BROUGHT IN YOUR LOCAL JURISDICTION TO ENFORCE AN ORDER OR JUDGMENT OBTAINED IN NEW YORK.

· Relationship of Parties. The parties to these Terms of Use are independent contractors and nothing in these Terms of Use will be construed as creating an employment relationship, joint venture, partnership, agency or fiduciary relationship between the parties.

· Notice. All notices provided under these Terms of Use will be in writing and will be deemed effective: (a) when delivered personally, (b) when received by electronic delivery, (c) one business day after deposit with a commercial overnight carrier specifying next day delivery, with written verification of receipt, or (d) three business days after having been sent by registered or certified mail, return receipt requested. We will only accept notices from you in English and by conventional mail addressed to: General Counsel Lord, Abbett & Co. 90 Hudson Street Jersey City, N.J. 07302-3973 We may give you notice by conventional mail or electronic mail addressed to the last mail or electronic mail address transmitted by you to us.

· Third-Party Beneficiaries. The members of the Lord Abbett Group are third-party beneficiaries of the rights and benefits provided to us under these Terms of Use. You understand and agree that any right or benefit available to us or any member of the Lord Abbett Group hereunder will also be deemed to accrue to the benefit of, and may be exercised directly by, any member of the Lord Abbett Group to the extent applicable.

· Survival. This Section 8 will survive any termination of these Terms of Use or your use of the Intelligence System. The undersigned hereby signs these Terms of Use. By electronically signing and clicking "Accept" below, these Terms of Use will be legally binding on me. To sign these Terms of Use, confirm your full name and enter your User ID and Password (as your electronic signature) in the fields indicated below and click the “I Accept” button.

Reset Your Password

Financial Professionals*

Your password must be a minimum of characters.

Confirmation Message

Your LordAbbett.com password was successully updated. This page will be refreshed after 3 seconds.

OK

 

Fixed-Income Insights

How could developments in currencies, oil prices, and the U.S. labor market affect inflation? Here’s a look.

 

In Brief

  • Amid investor uncertainty about the direction of U.S. Federal Reserve (Fed) policy, any surprise contained in upcoming inflation reports may result in a fresh round of volatility for financial markets.
  • We have identified three factors could influence U.S. inflation reports—and expectations—in coming months: U.S. dollar movements, oil prices, and U.S. wages.
  • Reduced U.S. dollar strength, potential improvement in oil prices, and a continuation of recent U.S. wage growth could combine to bring U.S. inflation close to or even above the Fed’s 2.0% target.
  • The key takeaway—The prospect of a surprise uptick in U.S. inflation may prompt longer-term investors to consider inflation protection strategies.

 

This is one comeback story that won’t leave audiences cheering. Inflation—courtesy of developments in the U.S. dollar, oil prices, and the U.S. labor market—could spring back to life in coming months, promoting market volatility as skittish investors fear a reacceleration of U.S. Federal Reserve (Fed) rate hikes. 

Investors already face a renewed uncertainty about the pace of U.S. policy tightening, as recent commentary from Fed officials signaled alternately dovish and hawkish outlooks.  The March statement from the Fed’s policy-setting arm, the Federal Open Market Committee (FOMC), cited concern about global financial and economic conditions when 2016 rate-hike projections were reduced, from four to two, which was followed the next week by comments from James Bullard, president of the Federal Reserve Bank of St. Louis, who said that another rate hike “may not be far off.”  (Read my colleague Tim Paulson’s recent commentary on central banks and inflation.) When the statements were released on March 16, the FOMC’s dovish policy and scaled-back rate-hike projections calmed investor concerns, pushing prices of risk assets higher and the U.S. dollar lower versus other currencies.  The more hawkish tone evident in Bullard’s remarks reversed the dollar’s slide and dampened newfound enthusiasm for stocks and high-yield bonds. 

With investors sensitized to the Fed’s mercurial views on policy, any surprise contained in upcoming inflation reports likely will result in a fresh round of market volatility, as investors rush to project how U.S. monetary policy may be affected. Inflation growth, as measured by the personal consumption expenditures (PCE) index compiled by the U.S. Bureau of Economic Analysis, has persistently fallen short of Fed expectations, as well as the central bank’s stated target of 2%. Important among factors pressuring U.S. inflation lower have been U.S. dollar strength, declining oil prices, and weak wage pressures.  Here’s a look at how those three factors could influence U.S. inflation reports—and expectations—in coming months. 

1) U.S. Dollar Movements
Strength in the United States has been well-publicized and is often used to explain weak exports for U.S. companies and weak non-U.S. earnings for domestic firms with significant international operations.  A strong dollar acts as an inflation suppressant via declining prices of the imported goods consumed by individuals and businesses. The dollar index (DXY), which measures the value of the U.S. dollar against a basket of other currencies, traded at around 80 for much of the first six months of 2014, and then marched steadily higher, to 100 in mid-March 2015.  In simple terms, this translated into more than a 20% reduction in the cost of aggregate imports over this period.  While there are delays with how quickly this currency effect translates into key U.S. inflation measures, such as the consumer price index (CPI) from the U.S. Bureau of Labor Statistics (BLS), or the PCE index, at nearly any point in 2015, aggregate import prices were lower than 12 months earlier. 

The upshot of all this is that U.S. dollar strength contributed to lower inflation consistently throughout 2015.  Even January and February 2016 offered favorable year-over-year comparisons.  March 2016, however, was different, as the greenback weakened.  And unless we see substantial and immediate renewed dollar strength, we will see little, if any, currency-induced downward pressure on U.S. inflation in 2016.

The average for DXY during March 2016 was 96.5, according to Bloomberg data—actually lower than the average of 97.9 for March 2015.  And the DXY average from April 1, 2015, through the end of the year was 96.7, close to the current level of the index.  Thus, unless the dollar improves substantially relative to our trading partners, the inflation-dampening benefit that characterized 2015 and early 2016 will be missing.  This is why the Fed has characterized the dollar’s downward pressure on U.S. inflation as “transitory.”  Indeed, as the effect of the stronger U.S. currency diminishes, announced inflation numbers over the next several months could be higher than many investors expect.

There are, however, some developments that could produce dollar strength over the balance of 2016.  Chief among them is the relative attractiveness of U.S. investments, as the Fed pushes short rates higher and quantitative-easing programs in the eurozone and Japan push debt yields in those regions toward zero, and often negative.  Such programs are not new; if they do produce dollar strength, it is unlikely they will match the 20% move that helped U.S. inflation in 2015.  Investors would be wise, then, to watch DXY over the balance of 2016.  Dramatic improvement could repeat the lower inflation effect of 2015.  On the other hand, DXY stability not only will imply higher inflation but also a reduction in the negative earnings surprises of companies with substantial earnings from exports and non-U.S. operations.

2) Oil Prices
Energy prices also may be poised to have a substantially lower influence on U.S. inflation over the balance of 2016 than they did in 2015.  The benchmark grade of crude oil, West Texas Intermediate (WTI), which frequently traded above $100 per barrel during the first half of 2014, offered a dramatic comparison and corresponding inflation impact when it averaged $53 per barrel during the first half of 2015.  (All oil price data presented herein are from Bloomberg.)  For the second half of 2015, WTI averaged about $44 per barrel, compared with $85 per barrel for the second half of 2014.  For much of 2015, WTI traded at a discount of more than 45%. 

However, the recent stabilization and subsequent price improvement of WTI suggests that year-over-year comparisons will have less impact now, and possibly less so over the balance of 2016.  At a recent price of about $40 per barrel, WTI is much closer to its average of $53 per barrel during the first half of 2015, and about 10% away from the second half average of $44 per barrel.  The price of oil, unless it declines toward $20 per barrel, seems likely to exert much less downward pressure on prices of goods and services in 2016 than it did in 2015.  The year-over-year benefits could allow headline inflation to creep higher than investors anticipate, especially in the second half of 2016, as the comparable 2015 average price drops to $44 per barrel and the potential for better supply/demand balance could push oil prices slightly higher than their current level of around $40 per barrel.

3) U.S. Wages
Wage growth in the United States also suggests inflation numbers may continue to advance over the balance of 2016.  Unlike the 2015 transitory effects of dollar strength and oil weakness, wages have been held down by a restrained pace of hiring and an increase in part-time positions.  However, as the economy nears Fed-defined full employment, wages have started to rise (even though more part-time positions are being filled).  Over the past four months, for example, hourly earnings have increased 2.5% on average, compared with an average of 2.0% or less for similar periods over the past several years, according to data from the Bureau of Labor Statistics. 

This trend seems likely to continue given the fact that the applicants-to-jobs ratio—a measure of labor market slack—continues to contract.  Based on BLS data, the ratio, recently at 1.4 to 1.0, has declined steadily from a high of 6.8 to 1.0 in 2009, and is even lower than the ratio of 1.8 to 1.0 that existed before the recession of 2008–09.  With less slack in the labor force, the competition among employers for fewer qualified candidates could produce continued wage pressures, which would be a contributing factor to structural inflation and one that would not be easily unwound.

Summing Up
Together, the effects of reduced U.S. dollar strength, the stabilization and potential improvement in oil prices, and a continuation of recent U.S. wage growth could produce inflation announcements close to or even above the Fed’s inflation target of 2.0%.  While such numbers should not cause panic, the knee-jerk reaction of many nervous investors could create unexpected volatility in fixed-income and equity markets.  For longer-term investors, now may be a time to examine inflation-protection strategies, before potential surprises increase the cost of such hedges.  Prepared investors also may be able to take advantage of volatility created by such announcements, as well as adopt strategies that are designed to perform better in the rising interest-rate environment that would accompany any significant comeback in inflation.
 

RELATED TOPICS

ABOUT THE AUTHOR

RELATED FUND
The Lord Abbett Inflation Focused Fund seeks to deliver total returns that exceed the rate of inflation in the U.S. over a full inflation cycle. Learn more.

Please confirm your literature shipping address

Please review the address information below and make any necessary changes.

All literature orders will be shipped to the address that you enter below. This information can be edited at any time.

Current Literature Shipping Address

* Required field