Market Matters: December 31, 2022
Risk assets closed a tumultuous year on a positive note in fourth quarter.
Credit/Fixed Income
Will Monetary Policy Become Less of a Headwind for Markets in 2023?
Yes. Markets will be less vulnerable to rising rate risk next year, as the aggressive tightening that has weighed on markets for much of 2022 has moderated more recently since inflation has slowed.
2023 Outlook: Credits
We expect most liquid credits will generate higher returns in 2023 relative to 2022, given the better yields on offer. We also see private credit as offering opportunities, particularly in secondary trading.
2023 Outlook: Interest Rates
We expect interest rates will increase in many developed markets, as implied by market pricing. But we think the Fed will hold rates in restrictive territory for longer than expected. We don’t believe any increases will prompt another European sovereign debt crisis.
Market Matters: November 30, 2022
Asset markets broadly advanced in November. The global equity rally continued as surging Chinese shares helped broader emerging markets outpace developed peers.
Should Credit Investors Expect More Negative Headlines in the Months Ahead?
Yes. The combination of rising interest rates and a deteriorating earnings outlook is likely to generate ample negative headlines about credit in the months ahead.
US Manager Universe Statistics: Third Quarter 2022
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
Solvency Beyond Relief: Unlocking the Full Potential of SFA Program Assets
The American Rescue Plan Act of 2021 included substantial relief funds for the most troubled US multiemployer pension plans through its Special Financial Assistance (SFA) program. This paper looks at how multiemployer plans have a unique opportunity to improve their solvency through 2051 and beyond by optimizing how they invest both SFA relief funds and their existing plan assets.
Market Matters: October 31, 2022
Risk assets rallied in October. Global equities recovered some of their steep third quarter losses, as developed markets topped emerging counterparts.
Quantitative Tightening Raises the Risks for Markets
With inflation running at multi-decade highs, monetary policymakers are united in one of the most aggressive tightening campaigns in decades. Most central banks have already significantly increased policy rates this year, and some are unwinding their massive balance sheets, also known as quantitative tightening (QT). In this paper, we review what is known about the current state of central banks’ balance sheets and their operations, discuss some known uncertainties of QT’s impact on financial markets, and consider QT in the context of the current market environment.