Perspectives Blog

Half-time report on the U.S. consumer

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 28, 2014

…owed to 3%. A big swing factor over the last few decades was the expansion of leverage and credit, as avenues and incentives to borrow increased over the last 30 years via credit cards, home equity loans and cash-out mortgage refinancing. Lending standards also fell and credit access reached to lower income households, particularly earlier last decade. The dynamic reached an apex when debt-to-income levels reached 128% in 2008 and could not be su…

ECB asset purchases — Bazooka or damp squib?

Martin Harvey, Fund Manager, Threadneedle International Ltd | September 22, 2014

…hat the ECB intends to boost the balance sheet by €1 trillion (Exhibit 5), the figure remains uncertain because of the nature of the policy. There are certainly question marks surrounding the likely take-up of the longer-term refinancing operations (TLTROs) and the potential size of asset-backed securities (ABS) purchases. It is therefore quite understandable that the market will take some convincing regarding the potency of the policy. Any sign…

Global market mid-year outlook

Mark Burgess, Chief Investment Officer, Threadneedle Investments | June 16, 2014

…t 0.5% for the year ending May 2014). The European Central Bank (ECB) has responded by cutting official interest rates to record lows and now charges banks for depositing funds. It has also outlined a new program of Long Term Refinancing Operations (LTROs) to aid bank lending and has said that it will intensify preparatory work related to outright purchases of asset-backed securities. Whether this policy response will work remains to be seen, but…

The perils and pitfalls of buying individual municipal bonds

James Dearborn, Head of Municipal Bonds | February 27, 2014

Volatile ratings leave retail investors at risk Retail investors could pay higher prices Deck is stacked against retail investors With an increasing focus on the benefits of owning municipal bonds — attractive after-tax yields, low historical default rates and relatively low volatility — investors are again considering purchasing individual muni bonds. But the deck may be stacked against the retail investor. The allure of owning individual bon…

Inflation consternation

Martin Harvey, Fund Manager, Threadneedle International Ltd | November 5, 2013

…ssure on yields, and lead Bunds to outperform other markets. Rather than easing, monetary policy has actually been in tightening mode in recent months, as excess liquidity has drained from the system following early Long-Term Refinancing Operation (LTRO) repayments. This adds to the case for the ECB to act, but there has been limited impact on overnight rates thus far. Reduced liquidity coupled with euro strength threatens the recovery. The longe…

More light, less tunnel

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | October 31, 2013

…above trend gains earlier this year and now are the source of the softer reads. In particular, Restaurants (part of leisure) saw a cut of 11,000 jobs, the first decline in three years. Finance also saw job losses, as mortgage refinancing activity fell due to the rise in interest rates. Countering this somewhat, goods-producing industries saw above average gains in construction (both residential and non-residential sectors), manufacturing, and min…

Three reasons why REITs can continue to rally

Arthur Hurley, CFA, Senior Portfolio Manager | May 19, 2014

…ing, but not limited to: Illiquidity and valuation complexities, redemption restrictions, distribution and diversification limits, tax consequences, fees, defaults by borrowers or tenants, market saturation, balloon payments, refinancing, bankruptcy, decreases in market rates for rents and other economic, political, or regulatory occurrences affecting the real estate industry. Dividend payments are not guaranteed. The amount of a dividend payment…