Labour Support Tapering Need Not Be Feared
Douglas Charleston examines the health of labour markets across key developed economies and why ABS investors shouldn’t fear the gradual removal of COVID related job support schemes
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TwentyFour Blog
Second time lucky?
It is hard to draw any immediate conclusion from this transaction other than Repsol's notable persistence to obtain sustainable financing.
The new mortgage prisoners – the unintended consequences of improving the world
In both instances, the good intentions of the regulator and the authorities are clear… But at the same time both changes have the potential to cause an increasingly undesired side effect.
Should We Fear the Repo Men?
Given the magnitude of the amounts involved we do think there is potential for some temporary volatility in the US Treasury market as the volumes change. We will be keeping a keen eye on both in the months ahead.
US Banks Pass Their Health Check
Yesterday the US Federal Reserve released the results of its annual bank stress test, subjecting the 23 largest US lenders to a punitive set of scenarios. Some observers might think the events since March 2020 had been sufficient to test the resilience of the banks, but the Fed went beyond this recent real-life challenge and tested bank balance sheets against a range of hypothetical crises.
A Lighter Shade of Green
We have a high opinion of Kensington as a mortgage lender and when we score it for ESG as part of our investment analysis it performs very well even without this latest Green initiative, but we do feel it can stretch further.
Punch Pubs Sees Off WBS and Shows Route to Bonds
All told, while we think relative value in WBS can be attractive, we believe the trend of refinancing in the bond market is only going to continue in the coming years, though it will be gradual.
FOMC: Taper Talk and Treasury Tumble
With all of the recent data pointing to higher inflation expectations and the Fed expected to maintain a transitory interpretation, we will be focusing our attention on comments from the various regional Fed presidents on conditions that could prompt a tapering move at some point in the future.
Why Gilts Are More Vulnerable to Inflation Than Treasuries
We believe UK government bonds are ultimately most vulnerable to a rise in inflation, and the 10-year Gilt currently trading at 0.73% does not come close to compensating for this.
Credit Fundamentals Set to Improve Further
Frustratingly for fixed income investors looking to buy bonds, the data seem to fully justify the high valuations we see in so many parts of our market at the moment; it really would not make sense to be able to buy bonds cheaply when conditions are so good.
Fed Sales a Drop in the Bucket, but Watch the Ripples
While we don’t expect any material spread widening in the near term, we remain extremely wary of higher duration bonds given our view that the potential persistent inflation suggested by recent data isn’t priced into US Treasury yields, which currently sit around 1.58% at the 10-year point.
Investors Should Fight Weakened CLO Docs
2021 looks set to become a post-financial crisis record year for European CLO issuance and refinancings, but amid the rush of activity we are seeing a concerning trend for weaker documentation in refinanced deals that in our view investors need to fight against.