Insights

July 15, 2020

Fed’s words prove more helpful than their actions

The Federal Reserve shocked markets on March 23rd when it announced extraordinary measures to ensure liquidity flows throughout financial markets.

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Peter Duffy, CFA
CIO - Credit, Sr. Portfolio Manager
May 25, 2020

Small Growth passing baton to Small Value

Small value equities are valued -38% below their 10-year average, while growth, defensive, low volatility, and ESG factors exceed the bubble threshold of +30%. This dispersion has reached a 20-year high, in line with the dot-com bubble.

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J. Paulo Silva, CFA
Sr. Portfolio Manager
April 16, 2020

Fallen Angels & the Fed

April 30th will see record fallen angel bonds move out of investment grade indices, more than the entirety of 2009. In response, the Fed has expanded its credit facilities to purchase fallen angels and HY ETFs.

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Peter Duffy, CFA
CIO - Credit, Sr. Portfolio Manager
March 31, 2020

Crisis Period Entry Points

Credit spreads peaked at 10.87% so far in the COVID-19 crisis. Spreads above 10% have occurred in 16 months over the last 25 years. In those 16 periods, high yield bonds have outperformed other asset classes, even stocks, over the 3 years that followed.

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David Jackson, CFA
Sr. Portfolio Manager
March 23, 2020

Spreads Above 700, Now What?

High yield bond spreads are 10.71% vs treasuries as of 3/25/20, elevated above the historical median of 4.89% due to macroeconomic uncertainty.

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David Jackson, CFA
Sr. Portfolio Manager