6 Oct 2015

Bond Traders Know Best

Last week, I wrote about how losses at the Swiss mining company Glencore were affecting the overall market.  In the article (found here), I said that bond prices in the market often reflect credit conditions before the ratings agencies like S&P and Moody’s make any changes. The Glencore situation may be a good example because bond prices have changed markedly in recent weeks as investors worry about their credit worthiness. … Read More

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30 Sep 2015

Some Bonds Fall as Stocks Falter

As stocks fell over the past several weeks, the junk bond market has also sold off as seen in the chart below.  The orange line follows the Barclays High Yield, or junk, bond index and you can see how it has roughly tracked the S&P 500 this year. Some commentators have argued that junk bonds served as a bit of a ‘canary in the coal mine’ because they dropped off… Read More

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23 Sep 2015

ALM Insights – September 2015

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: Janet Blinked What if You Called Them Market Perfectly? Part II Another Debt Crisis?

25 Jun 2015

ALM Insights – June 2015

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: Is Bond Market Liquidity Gone? Is Janet Bluffing? Looking at Deposit Alternatives

9 Apr 2015

Money for Nothing: Negative Yields

I’ve written a fair amount about negative yields in Europe (click here or here for a refresher), but the Swiss government crossed a new threshold yesterday by actually issuing bonds with a negative yield.   Previously, bonds that were already trading in the secondary market had reached such high prices that they had a negative yield, but that’s quite different than an issuance with a negative yield because it means that the issuer actually… Read More

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1 Apr 2015

Cat Bonds: Profiting from Tranquility

In the last six or seven years, a growing number of esoteric hedge fund strategies have made their way into mutual funds available to mom and pop investors like us. I’ve fussed around with a lot of these products in my own account in an effort to learn more about them and, don’t worry, you haven’t missed anything. One of the newer offerings buys ‘catastrophe bonds,’ or cat bonds, and… Read More

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31 Mar 2015

Beat the Market in Bonds

One way to judge the performance of a mutual fund or ETF is to compare the results to a relevant benchmark, which is usually an index that has relatively similar characteristics. Another method is to compare your fund to a group of funds that are basically pursuing the same strategy.  Admittedly, we don’t use this approach very often, even though I think it would make our job a lot easier… Read More

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24 Mar 2015

ALM Insights – March 2015

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: At Least We Aren’t Europe Bond of The Day – When Does 2% ≠ 2%? More Problems… Read More

12 Mar 2015

What Corporate Bond Yields are Telling Us

It should not come as a surprise to anyone that markets have performed very well over the past five years. The S&P 500 has earned 16.12 percent per year in the five years that ended in February. Few investors realize that corporate bonds have also done very well over the past five years. For the five years that ended in February, the Barclays US Corporate Bond index has earned 6.22… Read More

6 Mar 2015

Another New Normal?

A few weeks ago, I wrote about negative interest yields on bonds as long as ten years in Europe. (Click here for a refresher) The main point that I was trying to deliver (other than that it’s a crazy mixed up world) was that we really can’t say where yields in the US are going with much confidence. While that’s not a new argument coming from me, the idea that… Read More

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