Rates Become The Source of Risk Again
From time to time, Treasury yields actually become the source of risk for financial markets.
Insights Topic
Fixed Income
Should Investors Fear a Hawkish Tilt?
On Wednesday, the Fed moved one step closer to tapering and even put quite a clear timeframe for it, while on Thursday, the Bank of England openly talked about rate hikes.
Winter is Coming
It will take time for this sector to recover and we are likely to see more suppliers collapse in the coming weeks and months.
Stagflation – Probable or Panic?
Our base case is for a continuation of quite high growth and a modest inflation overshoot. For bond investors, positioning for stagflation could be a dangerous trade if that base case bears out
The Conditions for Tapering Already Exist
With ample job openings, inflation well ahead of target, financial conditions that are certainly not tight and strong economic growth, the obvious question is what does the Fed need to see to finally start tapering its asset purchases?
Credit Backdrop Shows More Upside for Euro High Yield
Despite the impressive returns of Euro HY over the last year or so, the backdrop for the asset class continues to suggest there is more upside to come.
Don’t Fight the Fundamentals on US High Yield
When combined with other prevalent market dynamics, the favourable ratings trend paves the way for a highly supportive fundamental terrain as we advance through the cycle and one that is ideal for portfolio managers selecting credits.
The End of the Road for Petrolheads
We can model all kinds of credit risk as long as there is enough protection in the structure for investors to get comfortable with a degree of residual value risk.
Dull Summer in CLO Land? Maybe Not
After a hectic first half of the year, most investors, including us, were hoping for a dull summer to recharge our batteries, but it seems there’s no respite from the CLO machine.
What We Can Learn From Spread Differentials
It is quite rare that we recommend playing in the very bottom of the credit spectrum because CCC rated bonds are where at least 95% of all defaults come from, and are significantly more volatile than we would like.
Bank Balance Sheets Continue to Strengthen
We agree that banks are sitting with an abundance of excess capital and will use some of it to repay shareholder support. However, capital buffers will remain elevated for some time to come,
Four Lessons for Bond Investors
If we suppose a bond investor views an upcoming event as a potential threat to their positioning, they may attempt to hedge their portfolio with another position. The event passes, and the hedge works, but to the investor maintaining the hedge seems like a good idea in the aftermath. Do you maintain the position or remove it?