“Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” – Milton Friedman “If we do see what we believe is likely a transitory increase in inflation … I expect that we will…
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Environmental, social, and governance (ESG) has been a nearly ubiquitous topic of conversation among investors in recent years, bringing to light important questions: How do you measure it? How do you report it? Why should you use it? However, to date, few U.S. insurance companies have incorporated ESG into their policy guidelines, and the practicalities…
The recently published SPIVA® Latin America Year-End 2020 Scorecard shows that the volatile environment of 2020, though potentially favorable for high-conviction active managers, did not necessarily translate into success for active managers. SPIVA scorecards measure the performance of active funds against an appropriate benchmark. For Latin America, S&P Dow Jones Indices began publishing the scorecard…
The newly launched S&P GSCI (U.S. 10-Year TIPS) TR was designed with inflation protection in mind. This index takes the renowned broad commodity market benchmark, the S&P GSCI, and aims to add boosted return potential from an exposure to on-the-run U.S. 10-Year Treasury Inflation-Protected Securities (TIPS). Normally, the S&P GSCI TR includes the collateral yield…
In June 2023, the U.S. dollar London Inter-Bank Offered Rate (LIBOR) will likely be discontinued. The Alternative Reference Rates Committee has identified the Secured Overnight Funding Rate (SOFR) as the recommended alternative reference rate to replace USD LIBOR. SOFR is calculated as a volume-weighted median of transaction-level U.S. Treasury repurchase agreements data, reflecting borrowing cost…
So far in 2021, the fixed income market certainly hasn’t been very fixed—instead posting negative returns—nor has it offered much income, with yields of just over 1%. U.S. equity and bond indices both posted strong performance in 2020, driving up asset class correlations and dropping yields to new lows. So, when the 10-year U.S. Treasury…
In part 1 of this blog, we saw how falling real interest rates reduce the retirement income a given account balance can support. In part 2, we focus on how interest rate risk may potentially be managed through an income-focused asset allocation. The S&P STRIDE (S&P Shift to Retirement Income and Decumulation) indices measure the…
This year will be key in the London Inter-Bank Offered Rate (LIBOR) transition. After consultation on ending the publication of LIBOR in USD, GBP, EUR, CHF, and JPY, the administrator of LIBOR, the ICE Benchmark Administration (IBA), may announce its decision soon. The announcement of LIBOR cessation would trigger the spread adjustment to be fixed…
Retirement investors faced numerous investment headwinds in 2020. In addition to heightened volatility in the stock market, they had to cope with falling interest rates on both regular and inflation-indexed bonds. Real interest rates, interest rates that have been adjusted to remove the effects of inflation, are especially relevant for retirement investors because lower real…
The year 2021 started with a continuous sell-off in the U.S. Treasury bond market. Starting on the second trading day of the year, yield on the 10-year U.S. Treasury Bond rose for five consecutive trading days by 23 bps until Jan. 12, 2021, when strong auction results for the 10-year note pulled the yield back…
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