The advantages of buying municipal bonds at a premium What are premium, par and discount bonds? Premium bonds carry a coupon rate that is higher than current market interest rates and have a market value above 100 cents on the dollar. Par bonds carry a coupon rate equal to current market interest rates and trade
Insights on current market events and investment opportunities.
We are as convinced as ever that equities have a significant advantage over other asset classes based on valuation. Managing the risk of simultaneous drawdown across asset classes requires a process to actively de-risk portfolios and a methodology for diagnosing the conditions to trigger such a step. To manage risk and stabilize portfolio values in
The U.S. Treasury market as a whole has returned +1% annualized since the end of 2012 (and +0.5% annualized since the low in 10-year yields in July 2012). Because of imminent Fed rate hikes and depressed yield levels, prospective returns look no better today. We recommend investors take profit in long-duration fixed-income sectors that benefited
The idea that Western economies may have entered a period of secular stagnation has been attracting an increasing amount of attention. If this thesis proves correct, we would expect investment grade credit to produce decent excess and total returns as discount rates fell further in such an environment. Equity valuations look consistent with some probability
Last week’s news suggests that the center of the FOMC continues to see interest rate hikes in the middle of next year as most appropriate. December 17 looks like a natural time to begin signaling the possibility of rate hikes to financial markets—an eventuality for which bond investors do not look prepared. There are risks
By Jennifer Ponce de Leon, Senior Portfolio Manager and Head of High Yield and Mark Van Holland, CFA, Senior Portfolio Manager Size of the Energy Sector Because the energy sector is a large component of the U.S. high yield market relative to some other asset classes, the market has received increased scrutiny due to recent
Lower oil prices should translate into higher demand as a result of cheaper petroleum prices and through higher global GDP growth, which in turn drives oil demand. While there are several factors that could serve to offset this higher demand, we should see some additional demand as a result of lower prices. The entrance of