Perspectives Blog

Hanging in

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | September 20, 2013

…ve higher with the effective rate on a 30-year mortgage now at 4.93%, the highest in over two years. And mortgage applications continue to plummet, down 14% last week and down a sizable 55% versus a year ago. Applications for refinancing have dropped 54% in just the last three months. Up until recently, refinancing activity was lowering mortgage payments and helping consumer pocketbooks, but this has come to a halt. Financial conditions matter gr…

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…

Outlook for the leveraged loan market

Columbia Management, Investment Team | June 20, 2013

…sted in 2007. Expanding upon the idea of stronger corporate fundamentals, much less leverage exists broadly in the loan market today than in the months leading up to the financial crisis. This is due in part to the aggressive refinancing activity that we discussed earlier, but also to the disciplined balance sheet management that corporate executives have undertaken coming out of the Great Recession. Cash flow generation remains high and appears…

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…

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…