What We Think

See our perspective on key developments in the US fixed income market and learn more about our investment philosophy, process, and strategies.

The Take
on what the market gives us…

The Original Issue Discount Trend in ABS: Attractive Bargain, or Value Trap?
By: Scott Hofer, CFA and Lyniese Patterson, CFA — June 7, 2023

Once a feature largely confined to the High Yield corporate bond market, bonds issued below par are becoming more common within the investment grade Asset-Backed Securities (ABS) market. Bond buyers need to examine the risks before investing, given that extension – rather than impairment – is the more relevant risk for senior ABS bondholders. Moreover, the investment grade ratings that ABS carry do not reflect this risk.
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Time (Again) To Think About Debt Ceiling Risks
By: Jake Remley — May 5, 2023

Admittedly, the debt ceiling showdowns are not my favorite thought exercises. Given the unpredictability of American politics, especially as of late, the risks of an actual default are next to impossible to handicap ex-ante. It’s one of those tail risks in which a small probability times a large impact equals an expected value that cannot be ignored. So, with the date potentially less than a month away, we consider both the immediate technical and lasting economic consequences of a resolution, one way or the other.
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Beware of The Hidden Tax of Money Market Funds
By: Cailly Carroll and Wesly Pate — April 13, 2023

Over the last year, the landscape for short-term investments has changed dramatically, with the Federal Reserve (Fed) enacting its first rate hike in four years in March 2022. With each Fed rate increase, the yields of short duration fixed income have risen in sympathy, some more notably than others. Given the elevated absolute level of rates, the opportunity cost of not evaluating short term and cash investment options has grown. However, that decision is more nuanced than just evaluating stated yields.
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