Bond investors are not too concerned about a persistent increase in inflation. Much ink has been spilled over the past quarter on inflation, which has clearly made a resurgence as the economy has begun to recover and strengthen. But there is an ongoing debate as to whether the current inflationary forces will be a short-term … Continue reading Credit Markets: Transitory or Non-Transitory Inflation? →

Bond yields rose dramatically in the first quarter as investors began pricing in the likelihood of the strongest economic growth in the U.S. and globally in decades and corresponding inflation concerns. The rapid rise in interest rates led to bonds being the only asset class in negative territory on a total return basis during the … Continue reading Credit Markets: Strong Economic Growth and Inflation Ahead →

As much as most would like to forget about 2020, it was a year to remember for the fixed income markets. From the historically aggressive monetary policy of the Federal Reserve, to extreme volatility throughout the fixed income markets due to the pandemic, to a significant change in Fed policy, 2020 was full of surprises … Continue reading Credit Markets: A Year to Remember? →

Since bottoming at a close of 0.54% on March 9, 2020, the 10-year US Treasury yield has slowly and quietly risen nearly 70% to 0.89% as of this writing. With the Fed holding short-term lending rates in the 0-.25% range, the slope of the yield curve has steepened dramatically as seen in the chart below. … Continue reading The Good and The Bad of Rising Interest Rates →

The Federal Reserve announced a significant change in policy during the quarter. The biggest news during the third quarter for credit markets came in late August with Fed Chairman Jerome Powell announcing a change in Fed policy. Going forward, the Fed will focus on “symmetrical inflation targeting,” a fancy way of saying the Fed will … Continue reading Credit Markets: A New Policy Paradigm →

For the first time in history, the Fed is buying corporate bonds. Credit markets participated in the overall market recovery in the second quarter, thanks in large part to the actions of the Federal Reserve. All categories of bonds showed positive returns in the second quarter. The Fed was successful in averting a credit crisis … Continue reading Credit Markets: Thanks to the Fed →

During the worst first quarter in 124 years for equities, credit markets were not immune to the unprecedented volatility in capital markets due to the coronavirus outbreak. With a yield of 1.92% at the beginning of the year, the benchmark 10-year U.S. Treasury bond ended the first quarter at 0.70% – a stunning 64% drop. … Continue reading Credit Markets: Unprecedented Volatility →

In 2019, credit markets exhibited a high level of volatility due to a number of factors. Overall, our fixed income benchmark, the Barclays Aggregate Intermediate-Term Index, provided a total return of 6.8% for the year, with corporate and junk bonds leading the charge with double-digit returns. The majority of our clients are invested in tax-free … Continue reading The Long and the Short of It →

The third quarter was another volatile one for credit markets, with yields across the maturity spectrum falling as markets continue to price in a slowing economic environment. On the short end of the curve, the Federal Reserve cut interest rates twice this quarter, bringing the Fed Funds target range to 1.75-2.00%. The cut in July … Continue reading Yields Continue to Fall →

Click here to download a PRINT VERSION of this article. At the end of March, the benchmark ten-year U.S. Treasury was yielding 2.41%. The second quarter saw yields on the ten-year Treasury fall by a remarkable 40 basis points (0.40%) to end the quarter at 2.01%. This is a historic drop in interest rates. Many … Continue reading Credit Markets: A Historic Quarter →