Fixed Income

July 27, 2022

Positioning Portfolios for An Environment of High Inflation

Investors should adopt inflation protection as inflation shows few signs of moderating anytime soon and central banks are tightening monetary policy aggressively. Treasury Inflation-Protected Securities (TIPS) can help position portfolios for an environment of higher inflation and lower growth. TIPS protect against inflation in two ways. First, the principal value of TIPS is indexed to… Continue reading

Asset Allocation, Fixed Income, High Yield Bonds, Portfolio Management, Real Assets, Risk Management

Asset Allocation, Inflation, Portfolio Management

July 22, 2022

What You Need to Know About Inflation

High inflation and the consequences of attempts to curb it are a top concern for investors nowadays. By hiking rates, policymakers can eventually slow demand to subdue price pressures, even in an environment of constrained supply. However, this process takes time. Prices reflect the interaction between supply and demand: when demand outstrips supply, prices must… Continue reading

Asset Allocation, Fixed Income, Global Equity, Global Macro

Inflation

March 24, 2022

Uncertainty Clouds the Outlook

An anti-goldilocks economy refers to the global economy where policymakers are confronted with a stagflationary supply shock, which is negative for growth and will tend to push up inflation further. In the current market condition, inflation is “too hot,” as evidenced by the higher energy and food prices, as well as the disrupted supply chains… Continue reading

Commodities, Emerging Markets, Energy, Fixed Income, Global Equity, Global Macro, High Yield Bonds, Market Commentary, Portfolio Management, Real Assets

economic outlook, market overview, market recap, Portfolio Management

June 16, 2016

Key Macro Themes and the Implications: Time to Pay Attention to Global High Yield Strategy (II)

The economic recovery has morphed into a meaningful period of expansion. Growth expectations remain favorable. The U.S. consumers’ financial position has improved as asset values have risen. Consumer spending comprises over 70% of GDP, and household balance sheets look strong. The recovered value of assets combined with limited debt accumulation means that household net worth… Continue reading

Asset Allocation, Fixed Income, High Yield Bonds, Portfolio Management

March 15, 2016

Macro Themes and the Implications: Time to Pay Attention to Global High Yield Strategy (I)

Key Macro Themes and the Implications Low inflation: Inflation is low but it does not mean inflation is zero. The slow growth in global economy keeps inflation subdued even as CPI slowly rises. Global policy divergence: Fed continues to normalize slowly as other central banks pursue stimulus policies. Investors should expect yields to rise modestly.… Continue reading

Fixed Income, Global Macro, High Yield Bonds, Portfolio Management, Risk Management

January 9, 2015

How does the current risk profile of the U.S. Aggregate Index affect the choice between indexing and active management?

Since the financial crisis, government policy and direct issuance of Treasury securities have resulted in increased duration and lower yields in the Barclays U.S. Aggregate Index. These changes pose a direct challenge to investors in bond index funds, which are fully exposed to the concentrated risks that are now embedded in the index. Modest return… Continue reading

Asset Allocation, Fixed Income, Global Macro, Portfolio Management

December 9, 2014

The “Big Squeeze” Begins

Traditionally, there have been two primary investment vehicles available to store cash: money market funds (MMFs) and bank deposits. Both eliminate mark-to-market (MTM) volatility, removing uncertainty associated with market gyrations via a fixed net asset value structure. This is a great benefit for anyone who has better things to focus on that the daily price… Continue reading

Fixed Income, Global Macro, Portfolio Management

November 17, 2014

Neutral Policy Rate

The concept of a Neutral Policy Rate has a very specific meaning in contemporary central bank practice. The neutral policy rate is the short-term interest rate consistent with full employment, inflation equal to the central bank’s inflation target and inflation expectations that are well-anchored to the inflation target. The neutral policy rate is related to… Continue reading

Asset Allocation, Fixed Income, Global Macro

October 20, 2014

Green Bonds

Every so often, market innovation and social imperatives create something exciting that has the potential to make a real difference. As the world’s developing countries and fast-growing cities are facing an increasing financial challenge from climate change, they need ads, airports, buildings, water systems and energy supplies that can stand up to rising global temperatures… Continue reading

Asset Allocation, Fixed Income, Portfolio Management

September 23, 2014

Summary of Thoughts: Policy Dissonance

The post-crisis economic policy mix has focused on achieving a handful of crucial outcomes: Force the financial sector and bond markets to take credit losses from the crisis early and quickly. Stress test financial sector balance sheets, and turbo-charge conservative recapitalization plans with public money. Provide publicly-funded aggregate demand while privately funded aggregate demand is… Continue reading

Fixed Income, Global Macro, Market Commentary

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