John Tierney
Summary The recent New York Community Bank (NYCB) blowup has brought renewed focus on bank exposure to commercial real estate (CRE). It is a potential problem – banks hold about 50% of CRE debt. Fortunately, the risk is distributed across some 5,000+ mostly small banks that serve local markets. More bank failures and mergers are […]
Bilal Hafeez
Shiloh Bates is the Chief Investment Officer of Flat Rock Global in 2018 – a $750mn credit manager.
John Tierney
Credit spreads have trended tighter in recent weeks, despite some high-profile defaults and downgrades of regional banks by Moody’s. Bottomline, these events have been in market prices for months.
Bilal Hafeez, Viresh Kanabar
Private market activity has fallen in H1, with total vehicles closed down over 50%. Investment trusts exposed to the private market are currently trading at wide discounts to their NAV as low liquidity and fears over asset valuations hurt investor sentiment.
Bilal Hafeez, Viresh Kanabar
We reduce our max overweight position in cash as the forward outlook requires a less defensive posture.
John Tierney
Credit spreads tightened significantly over the past month as equities continued to rally and the VIX index of equity volatility traded at post-pandemic lows.
Bilal Hafeez, Viresh Kanabar
Strategies like the 60/40 portfolio gained in popularity due to the negative correlation between stocks and bonds. However, this is a more recent phenomena as the correlation was positive before the 2000s.
Bilal Hafeez, Viresh Kanabar
We stay overweight cash and TIPS while maintaining our underweight allocation to equities, long-duration bonds, property, and private equity.
John Tierney
Investment grade and high yield corporate bond spreads are trading in a narrow range, in line with equity volatility.
Bilal Hafeez, Viresh Kanabar
This month, we expand the coverage of our asset class views and provide further granularity in each component.
Bilal Hafeez
While many were panicking about a 2008-style bank crisis, we cautioned against such predictions. So far, our view has been right.
Dominique Dwor-Frecaut
As is typical of most recoveries, the credit impulse is currently negative, suggesting a bank credit crunch may impact growth little.
Sam van de Schootbrugge
A new National Bureau of Economic Research (NBER) working paper, co-authored by researchers from Stanford and Columbia, analyses the US banking system’s exposure to rising interest rates.
Bilal Hafeez
In 2022, we outlined our ‘everything breaks’ portfolio, which meant constantly overweighting cash above all else.
John Tierney
Summary Pundits are again tilting at the frothy high yield credit market, saying spreads are too tight given rising rates and recession risks. They miss obvious fundamental reasons why credit spreads remain tight – default rates are low, and corporate balance sheets are in great shape.
Bilal Hafeez
2023 has started with a positive tone. Most risk markets from equities to crypto are up, and we identify four driving themes:
John Tierney
Corporate bonds spreads will widen significantly if, as we anticipate, persistent inflation leads to higher rates and a recession later this year.
Richard Jones
The concept of the business cycle has always fascinated me. And I have always thought understanding it is important for improving investment and trading decisions.
Bilal Hafeez
Marion is a senior economist at Deutsche Bank in London and a lecturer at Harvard University. She has extensive private sector, public policy, and monetary policy experience...
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