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

By Cliff Reynolds Tags: , , ,
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

By David Ott Tags:
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

By David Ott Tags:
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

By David Ott Tags:
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

By Cliff Reynolds Tags: , , , , , , , ,
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

By David Ott Tags: ,
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

By David Ott Tags:
19 Feb 2015

Negative Yields: It’s a Crazy Mixed Up World

One of my most vivid memories from the 2008 financial crisis was when the yield on the US three-month Treasury bill turned negative. Investors were so scared about what might happen that they were willing to pay so much for short-term bills that they would accept negative yields. Investors knew with certainty that they would get back less than their investment. I printed the screen because I thought it was… Read More

By David Ott Tags:
3 Feb 2015

Inside the Belly of the Yield Curve

Yesterday, I wrote that the yield on the 30-year US Treasury closed at an all time low at 2.25 percent. I also wrote that the yield on the 10-year was 2.66 percent, which was completely wrong: it closed at 1.66 percent on Friday, I simply made a fat fingered mistake – sorry. This mistake notwithstanding, I was struck by the two yields because the all-time record-low yield on the 10-year… Read More

By David Ott Tags:
14 Jan 2015

Two Questions for Bond Investors

Last year, the Barclays Aggregate bond index (the Agg) gained 5.97 percent. Overall, our bond portfolios earned less than that – not a lot less, but less (it varies among clients, so I will be intentionally vague here). Also, while our returns were less on a relative basis, we are happy with the absolute number – mid-single digit returns are not too shabby for bond investors in the current interest… Read More

By David Ott Tags: