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Economic & Market Commentary
Economic and Market Commentary
Fractured Markets, Strong Bonds
The effects of tighter financial conditions are becoming apparent, bringing forward the risk of recession while suggesting a supportive backdrop for bonds.
Apr, 2023
Strained Markets, Strong Bonds
Resilient assets with attractive yields can help portfolios stay centered in 2023, when we expect inflation to moderate, central bank policy to steady, and a recession to take hold.
Jan, 2023
Reaching for Resilience
Volatility, inflation, and geopolitical strain have countries and businesses focusing on defense. We argue for building resilience in portfolios in this fragmenting world, and delve into risks and opportunities we foresee over the next five years.
Jun, 2022
Viewpoints
The Worst Is Likely Behind for Emerging Markets
After withstanding a multitude of global challenges last year, emerging markets look poised for improvement as inflation recedes and the path of monetary policy comes into view.
Feb, 2023
Asia Market Outlook 2023: Regional Resilience Amid Strained Global Markets
As the COVID-19 recovery continues, we expect Asia’s growth-inflation dynamics to diverge from the rest of the world, led by China’s long-awaited economic reopening.
Growing Demand, Tight Supply Support Commodities in 2023
Despite macroeconomic headwinds, commodities markets may offer attractive return potential this year in light of ongoing supply constraints and China’s reopening.
Blog
Data Underpinning CPI Report Suggest U.S. Inflation Moderated Materially in March
March inflation data may put the Federal Reserve close to its terminal policy rate this cycle, if it hasn’t already reached it.
Cyclical Outlook Key Takeaways: Fractured Markets, Strong Bonds
Economic and market stresses raise the risk of a recession. Fixed income can offer the potential for attractive yield and stability amid the uncertainty.
The ECB Hikes Rates Amid Financial Market Volatility
In a dovish move, the central bank raises rates by half a point.
Mar, 2023
Education & Research
Across the spectrum understanding public and private credit
Credit provides a rich opportunity set for investors.
Understanding Investing
Education
Understanding Interest Rate Swaps
Interest rate swaps have become an integral part of the fixed income market. These derivative contracts, which typically exchange – or swap – fixed-rate interest payments for floating-rate interest payments, are an essential tool for investors who use them in an effort to hedge, speculate, and manage risk.
Understanding Credit Default Swaps
Originally formed to provide banks with the means to transfer credit exposure, CDS has grown as an active portfolio management tool. The performance of CDS, like that of corporate bonds, is closely related to changes in credit spreads. This makes them an effective tool for hedging risk, and efficiently taking credit exposure.
Understanding High Yield Bonds
High yield bonds – defined as corporate bonds rated below BBB− or Baa3 by established credit rating agencies – can play an important role in many portfolios. They typically offer higher coupons than government bonds or high grade corporate bonds (or, corporates) and have the potential for price appreciation in the event of an improvement in the economy, or performance of the issuing company (of course, if these conditions worsen, then prices can also go down). Because the high yield sector generally has a low correlation to other sectors of the fixed income market along with less sensitivity to interest rate risk, an allocation to high yield bonds may provide portfolio diversification benefits. In addition, high yield bond investments have historically offered similar returns to equity markets, but with lower volatility.
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