Category: Market Commentary

Is it Safe? By some measures, the selloff in the US fixed income markets has reached historic proportions.  Whether measuring the return of the Bloomberg Aggregate Index, the High Yield Index or US treasuries, the selloff has been dramatic since the highs of 2020. For context, the current drawdown from highs for the AGG is close to -13%, and for TLT (long duration treasury ETF),…

Have We Reached Peak Inflation?  US CPI Inflation is running at 8.5% year over year, and core CPI (ex. food and energy) registered a 6.5% print in the latest monthly reading.  With the broad-based rise in prices, global central banks have put their focus on price stability, and most of the monetary authorities in the developed and emerging market worlds are in the midst of…

Short Duration High Yield Funds vs. Loans Over the past six months, US leveraged loan funds have outperformed short duration high yield funds by a meaningful amount. The key driver of the relative performance was the lack of duration in the loan cohort.  Most leveraged loans are floating rate, and the index which floats is typically 3- or 6-month Libor, which is soon to be…

Weathering the Volatility Storm There have been very few places to hide from the financial market volatility of the past few quarters. Seeking shelter from the storm has been almost impossible, as every sector of the fixed income market is in the red, and equities have been repricing lower. The tables below highlight the pervasive nature of the down trade. In actuality, diversifiers to riskier…

May the Fourth Be with You! The Federal Reserve meets next Wednesday, May 4, in what will most likely be the second consecutive meeting during which they decide to raise rates. After slashing rates to 0% at the onset of the pandemic, the central bank has now begun the process of normalizing monetary policy.  What to Expect from the Fed for the Rest of the…

Add Closed-End Fund Leverage to the Watch List Closed-end funds are unique vehicles.  Unlike exchange traded funds (ETFs) and mutual funds, closed-end funds are exactly what their name says they are – investment vehicles that issue a set amount of shares and are not open to new money unless the fund does a shareholder rights offering or secondary to add more capital to the structure….

Breaking Down the Fed’s Inflation Playbook Raising rates to tame inflation is a play right out of the economic textbook. As the US CPI inflation rate has moved from below 1% last year to the current 8.5%, the Federal Reserve is being forced to drain liquidity from the system as “too much money is chasing too few goods.”   The Fed is threading a needle—in their…

Three Things to Watch This Week As we look ahead to this holiday week of Easter and Passover, there is no shortage of events over the coming days to keep investors and savers alert. Volatility across all asset classes has become a hallmark of 2022, as both knowns (central bank rate hikes) and unknowns (Russia/Ukraine) have created what seems like a pendulum — as equities…

The triple threat in the first quarter—continued Covid lockdowns in China, the Russia invasion of Ukraine, and global central bank tightenings—created a volatile and challenging environment, and risk premiums across asset classes rose accordingly. Read more from YieldX’s Chief Investment Officer, Stewart Russell on how these market challenges can be opportunities.