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There was one article after another article, every place you looked, that the U.S. equity markets were going to correct anywhere from 25% to 50% down. That has not exactly been the case. The American stock markets have been up and up and up as the wrong focus was used. I have said, countless t...
By enhancing liquidity and improving functionality in the corporate bond markets, new U.S. Federal Reserve (Fed) programs have been good news in the short term. Yet a number of unknowns remain regarding the rollout of these programs, and we foresee potentially challenging impacts for more high...
Junk bonds - those rated BB or lower - surged earlier this month as the US Federal Reserve announced it would be buying high yield ETFs for the first time in history. The announcement came on April 9, less than three weeks following the equity market low on March 23. On the news, speculative...
Originally recorded April 6, 2020 First, we have the crippling global pandemic that we're all struggling with, and second, a concurrent collapse in oil prices. The result of this has been a swift and broad-based repricing of risk across all the capital markets, across all sectors, ass...
Originally published April 8, 2020 It has always been interesting to me how the media concentrates almost 100% on the equity markets. It is almost like the bond markets didn't exist or, if they did, that it was on some far off planet that didn't deserve anyone's attention. I have always fe...
As a professional bond manager glued to a screen watching prices every day, it's hard to fathom that just a few weeks ago when March began corporate bond spreads were below historical averages¹. Flash forward, through what seemed like an eternity at the desk (or home office!), and those s...
“Convince me why I shouldn’t buy junk bonds.” It wasn’t a challenge. My colleague Kyle was looking at some of the juicy yields on offer in high-yield bonds and was legitimately wondering why he shouldn’t load up his IRA with them. I’m not saying ...
The credit market will be pivotal during the current crisis. In 2008, we had a problem in the credit market (Subprime mortgages), which made financial institutions move into credit tightening mode. Soon, that start cascading into the real economy. The current environment inverts that relation...
"We penetrated deeper and deeper into the Heart of Darkness" - Joseph Conrad, Heart of Darkness At the beginning of 2020 I said that the New Year would be nothing like the last year. Things are playing out as predicted, with Coronavirus thrown in for good measure, and with devastating co...
Investment returns will likely come down to a few big, unpredictable issues this year. We look at how they might upend market expectations. After a year of outsized returns for both equity and fixed-income markets, expectations for 2020 returns have settled closer to their long-run average...