Disaggregating the Aggregate Bond Index
The importance of the Barclays U.S. Aggregate Bond Index in the investment world might outweigh the attractiveness of its risk and reward profile.
Author: D. William Kohli
Sequester will take a small bite from GDP
With the automatic spending cuts, or sequestration, required by the Budget Control Act of 2011 still on track to go into effect starting Friday, March 1, we believe it’s important to keep the full impact in perspective. Even if we do go into a sequestration mode in the United States, or get bogged down in
Fixed-income markets moving beyond deleveraging
It appears that the effects of the major deleveraging event in 2008 — punctuated by the collapse of Lehman Brothers — has finally shifted into a second phase. For the past four years, fixed-income investors have been influenced primarily by fear of another Lehman-type event, and this has affected pricing in general. Now we believe
Europe’s debt crisis — gauging the risks
While the European Central Bank has made progress, we believe, on managing near-term liquidity risk, long-term structural issues remain.
Fixed-income markets returning to normal
The level of market distress surrounding global macro risks has declined in the latter half of 2012, helping sentiment and trading conditions in fixed-income markets return to more normal levels similar to those seen before the 2008 financial crisis.
Markets put macro risks in perspective
Since the 2008 market dislocation, fixed-income investors have been prone to anticipate another major macroeconomic crisis, but there are signs developing that macro risks may be easing and more normal market conditions are taking root.
QE1 and QE2 yield clues about QE3 impact
The Fed has taken extraordinary measures since 2008 to help keep long-term interest rates low through two rounds of quantitative easing, known as “Operation Twist,” followed by a third round of easing that targets the mortgage-backed securities market.
Dollar flexes muscle in world’s weak economy
The U.S. dollar appears relatively stable in a world of structural imbalances.
The risk in low rates
Despite the uncertain macroeconomic environment, we continue to believe that a strategy that relies on rates declining further to drive returns is a risky proposition. At current levels, interest rates would not have to increase much in order for investors to start seeing price declines in Treasuries and certain other high-quality bonds that today offer