Category Archives: Fixed Income

Natural Resources, a Potential “Natural” Play on Higher Inflation Expectations

As the economy expands and inflation ticks up in the post-election world, fueled by a pledge by President Trump to increase fiscal spending with improvements to America’s crumbling infrastructure, market participants will have to keep in mind the negative effects of increasing prices.  They may want to consider hard-asset-related investments to help maintain the purchasing Read more […]

Have We Seen the Bottom in Japanese Bond Yields?

While the idea of reflation is picking up steam in global markets, Japan’s core consumer price index rose 0.2% in February 2017, which remained far below the target of 2% set by the Bank of Japan (BoJ). The BoJ kept monetary policy steady in March 2017, continuing the diverging policy paths of central banks. In Read more […]

How to Build a TIPS Ladder Portfolio for Millennials

In his January blog post entitled “Try a TIPS Mixer in Your Equities Cocktail,” Phillip Murphy described the potential benefits of including Treasury Inflation-Protected Securities (TIPS) in one’s portfolio.  In this blog aimed at Millennials, I would like to propose an easy way to build up a 30-year TIPS portfolio for retirement. Let us assume Read more […]

Rieger Report: State G.O. municipal bonds have underperformed

Overall, general obligation bonds have underperformed revenue bonds over the last five years  of low rates.   State general obligation bonds have been the sector that is holding back returns as the lower yield and shorter duration characteristics of these bonds have resulted in muted returns in the up market. While revenue bonds have a larger foot print by par Read more […]

Asian Fixed Income: Continuing Rally for Indonesian Bonds

Indonesian bonds, as tracked by the S&P Indonesia Bond Index, gained 5.59% YTD as of April 5, 2017. This is a continuation of the strong growth trend observed in 2016, when the index increased 13.7% owing to the Bank Indonesia’s cut in interest rates on six occasions throughout the year. Indonesia has been one of Read more […]

Bridging the Volatility Gap between IG and HY

The goal of the S&P U.S. High Yield Low Volatility Corporate Bond Index is to construct a high-yield bond portfolio with low credit risk and low return volatility by applying a low volatility factor.  Does the index methodology truly deliver the effect of reducing volatility?  The back-tested results of the 17-year period ending Feb. 28, Read more […]

Rising Rates Arrive

Which of the figures below belong together?   It’s obvious, even if analogies aren’t your strong suit, that A is like C and B is like D.  A and C are not like B and D. The economic relevance of this simple visual exercise is this: At its March 2017 meeting, the Federal Open Market Read more […]

Asian Fixed Income: From Implicit Guarantees to Bond Defaults

Chinese authorities will allow market participants to buy onshore bonds through transactions carried out in Hong Kong, which will further broaden foreign access to China’s onshore bond market. While no additional details have been provided, a “bond connect” scheme that provides cross-border cash bond trading is anticipated by market participants. Despite currency volatilities, China bonds Read more […]

No News, and No Implications

This morning’s Wall Street Journal reported, rather breathlessly, that “U.S. bond yields are topping a key measure of the dividends that large U.S. companies pay—a shift that has broad implications for investors….”  The headline was triggered by the observation that the 2.50% “yield on the 10-year U.S. Treasury note…exceeded the 1.91% dividend yield on the Read more […]

The Rise of Green Bonds

Green bonds can play an important role in engaging institutional market participants in the transition to a low-carbon and climate-resilient economy. They can help to meet the United Nations Framework Convention on Climate Change goal of limiting global warming to 2°C above pre-industrial temperatures, along with the climate mitigation, adaptation, and finance commitments as set Read more […]