Muni bondholders were left in the cold in 2008 as liquidity premia soared and Treasury bonds became hot properties. Issuers are making their case in Washington for federal backing of their securities, but we believe defaults among upper-tier muni credits should remain low regardless.
With U.S. Treasury yields at their lowest levels in over 50 years, the effectiveness of Treasuries as a “deflation hedge” has been greatly diminished. While the current environment still demands that investors maintain deflation protection, investors should take advantage of the recent rally in Treasuries to rebalance allocations back to target and actively seek to…
Short-term borrowing spreads, corporate issuance, and implied volatility have improved, but remain at stressed levels.
Attractive opportunities abound (in equities and especially in credit), but the pervasive economic gloom will get worse before it gets better. Download PDF
While the recent uncertainty and volatility in economic and financial markets have made it difficult to ascertain the outlook for the venture capital market, these conditions may also serve to create a better supply/demand balance down the road. We continue to regard select high-quality venture capital managers as an effective means to capture returns from…
Today’s economic environment and current yields and spreads make investment-grade bonds an asset class worthy of consideration, but this would be a tactical bet with potentially significant downside if the exit is poorly timed.
Market leadership shifted abruptly toward high-quality mega-cap stocks over October and November, yet despite the sharp recent improvement in relative valuations of small caps and value stocks, we still think it is too early to switch from a defensive high-quality portfolio in the current environment.
The default outlook for high-yield bonds is dreadful, but with more than two-in-three issues trading at distressed levels, today’s yields already price in depressionary conditions.
While the current sell-off is in line with previous major bear markets of the postwar period, it is extreme in its speed and volatility. Precedent would suggest that markets will remain under pressure for the immediate future, but unless you assume we are on the verge of a 1930s’ style bust, equities are poised for…
While many pundits expect the financial sector’s problems to remain “contained,” we not only expect the bear market to spread beyond financials, but believe the economic damage may be greater than that inflicted during the downturn of 2000–03.