Agency mortgages are those that are explicitly or implicitly guaranteed by the government. There are three GSEs (Government Sponsored Entities); Fannie Mae, Freddie Mac, and Ginnie Mae. GSE mortgages and bonds backed by those mortgages have no credit risk, but do have interest rate risk.
CIFC Asset Management’s Natalia Lojevsky and Stan Sokolowski provide their insights into the Fixed Income Markets, which have been experiencing an elevated bout of volatility as interest rates and inflation expectations have risen sharply. Stan and Natalia discuss the sea of red YTD for traditional fixed income returns and say we’re in a golden age for income producing alternatives.
CIFC Asset Management’s Natalia Lojevsky and Stan Sokolowski provide their insights into the Fixed Income Markets, which have been experiencing an elevated bout of volatility as interest rates and inflation expectations have risen sharply. Stan and Natalia discuss the sea of red YTD for traditional fixed income returns and say we’re in a golden age for income producing alternatives.
On an absolute basis, many markets and financial assets seem expensive relative to historic levels. However, as Barclays Capital notes, “Valuations may be detached from fundamentals but not reality.” Cash levels are enormous and numerous investors undoubtedly are sheltering in “safe” assets.
As we enter November, investors have used newfound clarity surrounding the U.S political landscape after a contentious presidential election, with an apparent winner in Joe Biden, as a reason to forget a mostly miserable October.
As yield becomes increasingly difficult to find in fixed income markets how can an investor take advantage of the growing corporate credit environment, low debt service rates, and a lower exposure to interest rate risk as rates are expected to be volatile in the near future? To answer this question, short duration corporate debt with rules based fundamental metrics and behavioral analysis.
On Aug 28, the Federal Reserve memorialized its revised monetary framework by aiming for “average” inflation of 2% over time. In practical terms, the central bank told investors two things 1) they will keep interest rates low for years, therefore making income difficult to come by and 2) they will continue to press policy that is meant to stoke inflation.
In my opinion, true active strategies have a very important role in portfolios as complements to passive, cheap beta. Advisors need to understand what they own.
October was marked by continued volatility across fixed income and equity markets as investors faced various challenges, including persistent inflation concerns, rising yields, tightening monetary policy, and the backdrop of a U.S. Presidential election.
As an investor, it’s nice to know what we should expect from President Trump, because we have seen the movie before in 2017 – 2021. Apart from the early part of the Pandemic period, the economy and stock markets generally performed well.
Remember, our investment in stocks is a De facto vote of confidence on the economies in which we invest. Earnings, revenue, margins, free cash flow, and the growth of these important metrics is what drives stocks up or down over time.
The discretionary sector struggled as did all growth and quality-oriented areas of the market in 2022. That was a classic re-set and a raging opportunity to add exposure.
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