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Critical Week for Bonds

By David O'Malley | October 30, 2017

This week is a critical week for the bond market as 10-year Treasuries yields are trading above the 2.4% level that has been cited by Bill Gross of Janus as signaling a bear market. This sentiment was reinforced by Jeffrey Gundlach of DoubleLine’s comments when he called this “the moment of truth” for bonds. During the week, several key factors could significantly impact the near term movement of yields.

A Quick Guide to the Fed Chair Nominees

By John Swarr | October 26, 2017

This week’s Monday Morning O’Malley highlighted the upcoming selection of the next Federal Reserve (Fed) chair. The top candidates for the nomination include Jerome Powell, John Taylor, Janet Yellen, Kevin Warsh, and Gary Cohn. The Chart of the Week shows recent betting odds on who will receive the nomination. While the odds are fun to talk about, this week’s write-up covers the candidates’ viewpoints and policy stances so the risks behind the candidates can be anticipated. Investors should be prepared for any outcome by understanding how each candidate would lead the Fed on key issues including monetary policy, the balance sheet, transparency, and regulation.

And the Next Fed Chair is?

By David O'Malley | October 23, 2017

Stocks rallied and bond yields rose last week on optimism for the Republicans to successfully pass tax reform and on strength in third quarter corporate earnings. These two factors will probably continue to move markets in the coming week.

A Perfect Storm

By Jason Merrill | October 19, 2017

Before we jump into the commentary on this week’s Chart of the Week, let me first acknowledge how much of a tragedy these natural disasters have been for our country this year. The loss of lives and homes has been devastating. It is important for those of us that are personally unaffected by these events to keep in mind the struggle that so many are going through this year. However, the fact remains that many institutional investors have investment exposures to these disasters as well, so the discussion regarding the impact on portfolios must and will continue.

Inflation Data Disappoints

By David O'Malley | October 16, 2017

The Consumer Price Index (CPI) increased by 0.5% for the month of September but was lower than expected. Despite a tight labor market, strong economic conditions and increasing commodity prices, inflation has remained lower than expected throughout 2017. Further, CPI has been lower than its expectations in six of the last seven months.

Fundamentals Rule the Day

By Greg Zappin | October 12, 2017

The daily record highs in the equity markets and the relentless grind tighter in the credit markets elicit both feelings of marvel and trepidation. As you can see in the chart above, revenue and EBITDA are growing at strong levels across the companies in the S&P 500. The uneasy feeling in the fixed income market comes from the disparity between valuations at or near their post crisis tights versus the constant barrage of negative news outside of Wall Street – North Korean war talk, devastating hurricanes and fires, mass shooting in Las Vegas, and dysfunction in Washington. For most high-yield investors, waiting for the big pullback by sitting in cash is not an option, as the active manager gets compensated to take risk and outperform an index. It’s easy to get distracted in this type of market. When I sift through all the noise, I have found the best way to construct a credit portfolio is to rely on business fundamentals as a guiding light.

Underlying Employment Strength

By David O'Malley | October 9, 2017

Last week’s September employment report showed weakness in the headline jobs gained number but significant underlying strength in other measures. The economy lost 33,000 jobs for the month versus an… Read More

Fade the Metal Rally

By Zhiwei Ren | October 5, 2017

In the last two years, there has been an impressive rally in industrial metals. From the lows during early 2016 until today, copper is up 50%, zinc is up 100%, aluminum is up 50%, and lithium is up 120%. When industrial metals rallied, stocks in the metal and mining sector rallied sharply as well.

What Will the Fourth Quarter Hold for the Markets?

By David O'Malley | October 2, 2017

Before beginning, we would first like to extend our heartfelt thoughts and sympathies to all of those affected by the recent tragedy in Las Vegas. Equity markets ended the third quarter on a positive note as optimism about the economy and fiscal stimulus in the form of tax cuts kept stocks well bid. The fourth quarter gets off to a quick start this week with some key U.S. economic data.



Disclosure Statement

This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

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Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

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