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Looking Beyond the Current Surge in Infections

Insights
1-5 year corporate credit is on track to achieve a consecutive year of strong total return. Based on the Bloomberg Barclays Investment Grade 1-5 Year U.S. Corporate Bond Index as of October 31, 2020...
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3Q Market Commentary

Market Commentary
Fixed income markets largely treaded water over the quarter as states reopened and isolated surges were watched with trepidation while equity markets pushed ever higher as economic data demonstrated the resilience of the domestic economy.
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Incorporating ESG Factors into Our Investment Framework

Insights
A central tenant in fixed income investing is risk minimization; therefore, an analysis of ESG issues is paramount to fully embracing the practice of prudence
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2Q20 Market Commentary

Market Commentary
Markets continued to rally over the quarter as expansive monetary policy and fiscal stimulus offset the economic distress brought on by coronavirus
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ZIRP Returns! – Extend Duration in Short Corporate Bond Portfolios

Insights
Following the June FOMC meeting, the Fed released its first summary of economic projections (“SEP”) incorporating impacts from the Covid-19 pandemic.
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Don’t Fight the Fed

Insights
Price action in investment grade corporate credit during the month of March was historic.
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Negative Real Yields and Buoyant Equities Send Mixed Signals

Insights
Relative to Covid-19, a possible Middle East conflict with Iran at the beginning of the year was met with little...
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January Monthly Market Commentary

Market Commentary
The coronavirus outbreak in China shook markets mid-January. Markets entered 2020 on an optimistic note following the Phase 1 trade...
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December Monthly Market Commentary

Market Commentary
Trade news primarily drove market sentiment as 2019 came to a close. Progress towards a “Phase 1” trade agreement with...
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Diversifying Exposure Away From Corporate Credit on Relative Value

Insights
The aggregate U.S. corporate index had a historic year in 2019 achieving 14.3% in total return which was only bested...
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Underweight Food and Beverage Credit

Insights
This comes after a year of extremely negative returns of -4.45% compared to -2.81% for index eligible industrials with spread...
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November Monthly Market Commentary

Market Commentary
The U.S. and China continued to make progress towards a “Phase 1” trade agreement. Most developed economy central banks, including...
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Retail Sales

Insights
While prospective data for manufacturing activity appear to have bottomed out in August and September according to readings from purchasing...
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Repo Stress

Insights
The rate on overnight repo surged on Monday, 9/16 and remained elevated through the week causing the federal funds rate...
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Tame Inflation Affords Fed Room to Cut in September

Insights
Weakening sentiment as evidenced by global central banks’ dovish and the recent inversion in the 2s10s curve is likely to...
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Goldilocks

Goldilocks

Market Commentary
The 10-year Treasury yield peaked at 2.60% early in the quarter before plunging to 2.01% at the end of June.
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A Transition from LIBOR

Insights
Due largely to recent LIBOR manipulation scandals, regulators in the US are set to phase LIBOR out by the end...
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Consumer ABS

Insights
Unlike senior unsecured corporate bonds, ABS transactions are structured so senior tranches are able to maintain AAA ratings even if...
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Credit Cycle Rolls On

Insights
The Fed’s positioning still leaves room for a pivot back to hawkish, but the window may have already closed for...
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That’s All Folks

That’s All Folks

Market Commentary
Domestically, the Federal Reserve’s 180-degree policy pivot, a pause in rate hikes and possible adjustments to balance sheet rundown prior...
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Rosy Markets

Insights
Sentiment for risks assets has vastly improved as fear of a recession induced by monetary policy missteps eased considerably with...
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All About the Expectations

Insights
More recently, statements from Fed officials and minutes from the December FOMC meeting have firmly anchored dovish expectations at least...
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Volpocalypse Redux

Volpocalypse Redux

Market Commentary
This reaction coupled with data indicating slowing global growth, impending Brexit politics, trade wars, and domestic government strife amplified risk...
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A Cautious Fed in the Year of the Pig

Insights
The persistent lingering of geopolitical issues that have seemingly reached maximum escalation only find new ways to further intensify driving...
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Rising Short Interest in High-Yield ETFs

Insights
Year-to-date, lower quality issuers have driven outperformance in the sector with excess returns of +2.6% for Single-B and +4.3% for...
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Evolution of Firm Value Highlights ESG Issues

Insights
This increase not only includes technology firms whose values comprise the application of algorithms, but also firms that have paid...
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Onward and Upward

Onward and Upward

Market Commentary
Over the quarter, the yield curve bear flattened as frontend yields rose 25-30 basis points while longer maturities rose 20-25...
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Monetary Mayhem and Geopolitics

Monetary Mayhem and Geopolitics

Market Commentary
The European Central Bank (ECB) presented a fairly dovish outlook while the Federal Reserve (Fed) increased rates by 25 bps...
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Trade Talk Tantrum

Trade Talk Tantrum

Market Commentary
Economic activity lost some momentum from the fourth quarter, but remained healthy.
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Off and Running

Off and Running

Market Commentary
Further, Fed officials are forecasting three hikes in 2018 matching the 2017 pace.
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Conventional Policy for Unconventional Times

Conventional Policy for Unconventional Times

Market Commentary
However, Fed officials opined that lower inflation was transitory and did not warrant deviations from policy forecasts jolting market expectations.
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Prime Time

Prime Time

Market Commentary
Investment grade credit traded in a fairly narrow band finishing the quarter almost unchanged.
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Much Ado about Nothing

Much Ado about Nothing

Market Commentary
The brief rout reversed on expectations of further easing by global central banks – a common elixir to economic malaise...
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Employment, Price and Global Market Stability?

Employment, Price and Global Market Stability?

Market Commentary
Credit spreads soared, especially for commodity related sectors.
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R.I.P. Z.I.R.P.

R.I.P. Z.I.R.P.

Market Commentary
Commodity prices continued to come under pressure as well with oil declining 30% on the year.
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Lower for Longer

Lower for Longer

Market Commentary
Energy and metals/mining sectors are stressed especially in the high yield space.
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Are we there yet?

Are we there yet?

Market Commentary
The yield curve bear steepened (see Figure 1) as two-year Treasury yields increased 9bps while the thirty-year Treasury yield increased...
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The Waiting Game

The Waiting Game

Market Commentary
Risk assets delivered uneven results and U.S. Treasury yields were volatile as well (see Figure 1). On the quarter, performance...
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Lost in Translation

Lost in Translation

Market Commentary
The New Year is an opportune time to ensure your policy and investment choices are equipped to take advantage of...
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The Home Stretch

The Home Stretch

Market Commentary
In this quarter’s commentary we will examine the Fed’s exit policy and its effect on markets as well as providing...
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New Challenges

New Challenges

Market Commentary
In this commentary, we’ll examine the current regulatory environment for money funds while providing an update on the state of...
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Rationalize Your Liquidity Premium

White Papers
Many will read the title above and feel the way some do when talking with a mechanic about what might...
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Changing of the Guard

Changing of the Guard

Market Commentary
In this commentary, we outline what is next for the Federal Reserve, discuss the upcoming earnings season, and briefly revisit...
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The Year of the Taper

The Year of the Taper

Market Commentary
Meanwhile, central bank policy will continue to have a significant impact as the Fed carefully exits its high-octane policy.
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Brokers vs. Registered Investment Advisors

White Papers
Why would someone choose to pay an explicit fee to a Registered Investment Advisor (RIA) when they could simply use...
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Taper, Taper, Toil and Trouble

Taper, Taper, Toil and Trouble

Market Commentary
The odds of a technical default are rising, but it is still a very low probability event in our estimation.
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Talk Centers of Fed Tapering

Talk Centers of Fed Tapering

Market Commentary
While the market volatility post-announcement seemed a bit overdone in our view, investors should take notice: the FOMC’s recent statement...
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The Specter of Higher Yields

The Specter of Higher Yields

Market Commentary
In this month’s commentary, we will look at historical rising rate environments, consider portfolio implications and discuss what the future...
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Volatility Awakens

Volatility Awakens

Market Commentary
If so, we would view wider credit spreads as an opportunity to selectively add risk rather than avoid it.
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Quantitative Easing is a Market’s Best Friend

Quantitative Easing is a Market’s Best Friend

Market Commentary
Like diamonds, QE incites joyous reactions from its respective benefactors and carries the perception, right or wrong, of lasting forever.
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The Great Rotation

The Great Rotation

Market Commentary
With the threat of rising longtern yields, analysts fear this may spell impending doom for the bond market; but should...
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A Call to Action

A Call to Action

Market Commentary
The dawn of a New Year coupled with the expiration of the muchutilized FDIC Transaction Account Guarantee (TAG) Program and...
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Making a List and Checking it Twice

Making a List and Checking it Twice

Market Commentary
Evaluating these list items now will provide professionals with the flexibility to design the best response for potential adverse outcomes....
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Change You Can Believe In

Change You Can Believe In

Market Commentary
Both events will add risk to assets that previously had little to none, and should motivate investors to seek prudent...
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The Convexity of Credit Revisted

The Convexity of Credit Revisted

Market Commentary
While developed markets abroad have experienced exceptional volatility in 2012, this volatility has neither derailed the impressive performance of U.S....
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The Summer of Our Discontent

The Summer of Our Discontent

Market Commentary
With that in mind we’ll discuss a couple of major developments in the short-maturity fixed income space: GSE support and...
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Waning Interest

Waning Interest

Market Commentary
By contrast, interest rates in “peripheral” countries remain volatile and on a general upward trajectory as eurozone policymakers struggle to...
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United We Stand, Divided We Fall

United We Stand, Divided We Fall

Market Commentary
While we will reserve judgment on the recent policy actions until additional details emerge, we anticipate further consolidation of monetary,...
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Money Market Reform

Money Market Reform

Market Commentary
As such, corporate practitioners should begin to formulate a plan to respond to potential changes that could potentially affect their...
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Money in the Bank

Money in the Bank

Market Commentary
As the markets struggle to digest the European Union’s plight alongside renewed concerns about bank capital levels globally, investors should...
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The Convexity of Credit

The Convexity of Credit

Market Commentary
As in past periods of potential interest rate volatility, we recommend that investors remain duration neutral and opportunistic of sudden...
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Credit Check

Credit Check

Market Commentary
As these downgrades will most likely occur before summer arrives, we shall examine the potential unexpected credit exposure a cash...
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The Diffusion of Innovation

The Diffusion of Innovation

Market Commentary
Further evaluation of the Diffusion of Innovation theory is relevant today in demonstrating how short-duration investors have adapted and, in...
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Happy “New Normal” Year

Happy “New Normal” Year

Market Commentary
We continue to face a challenging investment environment as front-end supply diminishes, rates remain low, highly-rated credit remains suspect and...
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Money Market Blues

Money Market Blues

Market Commentary
Money markets investors are operating in a dangerous environment full of overpriced, risky assets.
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Jumping Over Dollars For Dimes

Jumping Over Dollars For Dimes

Market Commentary
A defensive credit overweight will allow investors to navigate future volatility as the European debt crisis continues to unfold in...
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Pushing on a String

Pushing on a String

Market Commentary
Consequently, as economic growth proves anemic, unemployment remains stubbornly high and inflation is contained within the Fed’s acceptable range, we...
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A Renewed Case for Extension

A Renewed Case for Extension

Market Commentary
Our answer to this question, particularly, whether or not investors should extend the durations of their ultra-short liquidity pools, was...
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Deficits, Defaults, and Downgrades

Deficits, Defaults, and Downgrades

Market Commentary
The markets were volatile in the days surrounding the events of the S&P downgrades, additional support measures in Europe, and...
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Cruel Summer

Cruel Summer

Market Commentary
Rather than fighting against summer headwinds by remaining invested in risky credits (i.e., prime money funds, bank deposits and direct...
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House of Cards

House of Cards

Market Commentary
Investors will most certainly discover that the risks and problems lurking deep in the shadows of their fund holdings are...
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Where the Sidewalk Ends

Where the Sidewalk Ends

Market Commentary
As Congressional leaders begin the heated battle to reconcile long-term structural imbalances, both parties agree that the resolution of the...
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Is This Time Different?

Is This Time Different?

Market Commentary
We ask the question: Is this most recent rise in interest rates different than previous interest rate shocks we have...
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Social Unrest

Social Unrest

Market Commentary
These factors will strengthen the FOMC’s stance of keeping interest rates low for an “extended period” despite inflationary headwinds as...
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The Sorry State of the States

The Sorry State of the States

Market Commentary
With taxpayers subjected to low income growth and elevated unemployment, state leaders have little option but to focus their deficit-reduction...
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Review and Outlook

Review and Outlook

Market Commentary
We therefore look to the labor market as an indicator of future FOMC actions and of the likelihood of sustainable...
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Fall of the Titans

Fall of the Titans

Market Commentary
We encourage investors to review banking relationships, bank deposits, direct security and prime money market holdings for exposure to troubled...
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Mortgages Make Another Mess

Mortgages Make Another Mess

Market Commentary
A deeper dive into the mortgage market and the status of key players will help to clarify the issues.
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Extend Now

Extend Now

Market Commentary
Failing to adjust to the current reality in the money markets will lead to painfully low returns on investment portfolios...
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The Great Uncertainty

The Great Uncertainty

Market Commentary
The largest hurdle to a sustained economic recovery appears to be the pervasive uncertainty that has entrenched market participants. Removing...
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Unusually Uncertain

Unusually Uncertain

Market Commentary
With short interest rates likely to remain range-bound at these low levels for the next 12-18 months, we recommend that...
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When More Means Less

When More Means Less

Market Commentary
This is a cause for concern, and investors should be wary of industries and companies in which the government and...
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Contagion

Contagion

Market Commentary
The potential effect of deteriorating fundamentals in Europe on the already fragile U.S. economy leads us to push our target...
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Hell Hath No Fury Like SEC Scorned

Hell Hath No Fury Like SEC Scorned

Market Commentary
We maintain an underweight view in the financial sector and see severe challenges to the industry going forward.
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The People United Will Leave the Banks Divided

The People United Will Leave the Banks Divided

Market Commentary
In an extension of last month’s market commentary, we reemphasize the need for investors to monitor potential credit risks closely...
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Dr. Bernanke’s Dreaded Prescription

Dr. Bernanke’s Dreaded Prescription

Market Commentary
We do not anticipate the Fed raising rates until Q4 2010 at the earliest, and see high probability that action...
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One of these Votes is Not Like the Others

One of these Votes is Not Like the Others

Market Commentary
The debate will intensify into 2010 over whether Governor Hoenig’s vote is a sign of changing sentiment at the Fed...
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Economic Remodel

Economic Remodel

Market Commentary
We welcome the effects of intervention to stabilize the financial system, but we remain concerned about the lingering effects of...
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How Money Markets Fail

White Papers
As the credit crunch rippled into nearly every instrument in the debt market, investors wondered how purportedly “safe” securities (so...
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Investment Accounting Consideration

White Papers
In February 2005, PriceWaterhouseCoopers announced that they would no longer qualify auction rate securities as cash equivalents on the balance...
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Centralized Trust and Customer Relationships

White Papers
Few people do without automobile insurance even though annual policy premiums can easily run into the thousands of dollars....
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Securities Lending

White Papers
In today’s capital markets, investors with large portfolios always seek opportunities to maximize liquidity and return while preserving principal value...
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Internal Investment Manager or External – Or Both

White Papers
Organizations frequently explore the question of how to maximize the return on their investment portfolio by debating the benefits or...
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