Advisories, Observation Deck

 

Advisories
September 18, 2013 Posted by
FOMC Announcement - September 18, 2013 - The Federal Reserve today decided to keep the target range for the federal funds rate unchanged at 0 to 0.25 percent with many revisions to previous announcement and added some new statements. They maintain that policymakers suggest the U.S. economic activity has been expanding at a "moderate" pace which is a change from last month's phrase of "modest." On the economy, they added that the "tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market."
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Observation Deck
September 03, 2013 Posted by
Financial yields have rallied substantially since the credit crisis of 2008–2009. According to Barclay’s indices, the differential between intermediate industrial and financial sectors bond spreads has tightened significantly, with a mere 11 bps differential as of the end August 2013.
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Observation Deck
August 01, 2013 Posted by
Market speculation on the timing of the Fed’s tapering has caused volatility in the bond market. Global corporate new bond issuances declined materially in June 2013 compared to robust issuance levels during the first five months of 2013. Nonetheless, we generally expect corporate credit risk to remain steady through 2013, with divergence in credit trends among various sectors. While investment grade corporate credit spreads initially widened 16 bps on speculation of the Fed’s tapering bond purchases, they have recently tightened by around 20 bps to 76 bps around mid-July.
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Advisories
July 31, 2013 Posted by

FOMC Announcement - July 31, 2013

The Federal Reserve today decided to keep the target range for the federal funds rate unchanged at 0 to 0.25 percent. Policymakers suggest that U.S. economic activity has been expanding at a moderate pace, with labor market conditions showing "further improvement," however the unemployment rate remains elevated.

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Observation Deck
July 01, 2013 Posted by
The Fed believes the U.S. economy must be on stronger footing to consider reducing bond purchases and ending quantitative easing programs (QE). The talk of the possible end of QE led to a recent spike in bond yields. Since Chairman Ben Bernanke’s economic testimony to Congress on May 22, the U.S. Treasury curve has seen bond yields climbed as high as 60 basis points.
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Advisories
June 27, 2013 Posted by

To ensure the product is appropriate for their defined risk and liquidity tolerance, we believe investors and their boards should be fully aware prior to investing of the various issues CD programs can present, including liquidity risk, low transparency to bank failure, high penalties for early withdrawal which may cause loss of principal and other factors. 

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Observation Deck
June 03, 2013 Posted by

In the past month, there has been quite a bit of rhetoric regarding quantitative easing and whether or not the Fed will be tapering off asset purchases anytime soon. The lack of confidence in the Fed's easing of monetary policy coupled with an improved economic landscape hints at a possible slowdown in the pace of asset purchases. These factors could mean short-term rates are at a bottom, which leads to the question: Is it time to consider increasing floating-rate bonds, or floaters?

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Observation Deck
April 30, 2013 Posted by

he Federal Reserve first began its asset purchase program in the fall of 2008 to combat the financial crisis. Almost five years later, with slow GDP growth, high unemployment, and non-present inflation, the Fed is well into its third purchase program. Some investors fear these actions will spark higher inflation. We believe this shouldn’t be a concern — at least in the short run.  

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Observation Deck
February 27, 2013 Posted by

Four years of quantitative easing and an essentially zero percent target rate have certainly had an impact on the bond markets and corporate cash management. We saw the Fed's balance sheet balloon to over $3 trillion in January, the ten-year Treasury note hit an all-time low of 1.39 percent in July of last year, and U.S. corporate bond issuance had a record year with over $1.3 trillion in new issuance. Now that we are two months into 2013, it might be worthwhile to take a look at how this year is shaping up in terms of corporate bond issuance and what that means for corporate cash investment portfolios.

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