With economic activity continuing to grow at a low single-digit pace, the Presidential race still too close to call, and the “fiscal cliff” looming, fixed income investor demand for safety continued in September. The flight to safety is most evident in the demand for 3-month U.S. Treasury Bills, which closed the month with a yield-to-maturity […]
The heightened volatility in the fixed income market that first developed in mid-July continued into August, as investor continued to grapple with mixed economic signals and nervousness out of the Federal Reserve. The 30-year Treasury bond began the month with a yield-to-maturity of 2.54%, which rose to 2.95% mid-month before falling back to 2.67% at […]
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Against a mixed economic backdrop, confusing signals from Federal Reserve Chairman Bernanke, and ongoing brinksmanship in Europe, the 10-year Treasury note briefly touched an all-time low yield of 1.39% in July, before ending the month at 1.47%. Similarly the yield spread between the 2-year and 30-year Treasury notes narrowed to 223 basis points, more that […]
June was a month of relative reprieve from the ongoing European fiscal drama. Favorable outcome in the Greek election combined with the agreement among Eurozone members to move toward an FDIC-like bank support model went a long way to soothing the nervousness that griped the capital markets at the beginning of June. Of note during […]
Risk aversion returned to the capital markets last month, as investors struggled to understand the fate of European monetary union. The fear was most evident in the exodus of Euro-denominated assets out of European banks and into the U.S. dollar. Spanish banks bore the brunt of the capital outflow, with an estimated 100 billion Euros […]
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As we conclude another robust earnings season, media attention has fixated on select weaker economic data, while ignoring economic strength. In the previous two years, global economic activity has slowed as spring arrived in the northern hemisphere. Anticipating a third consecutive year of second quarter weakness, investors over the last six weeks have reacted by […]
Looking past the noise of day-to-day market volatility, the investment climate has improved markedly since the end of 2011. The feared collapse of the global banking system has faded with European Central Bank’s Long Term bank funding operation and, while Greece was unable to avoid default, the write-down of Greek debt occurred without the messy […]
Despite the price weakness observed during the month, we continue to believe that U.S. Treasury interest rates remain artificially low and that corporate and municipal debt offers an attractive investment opportunity. To detail that thesis, we’ve prepared the following valuation discussion. In its simplest form, valuation is the expected purchasing power (also known as the […]