Latest Stories

Are Leveraged Loans Becoming a Crowded Trade?

By Scott Ellis | March 30, 2017

Corporations have a variety of different options when it comes to raising outside capital. In the most basic form, they can issue equity or debt. When corporations elect to raise debt, they can issue it on a secured or unsecured basis and with fixed or floating rates. It is up to the management teams to choose the best option for the company at that time and to preserve its options for the future.

Stocks Pull Back on Trump Administration Policy Concerns

By David O'Malley | March 27, 2017

Last week was highlighted by the Republicans’ failure to repeal and replace the Affordable Care Act (ACA). The policy setback was not well received by stocks, as the U.S. markets suffered both its worst day and week in 2017.

Foreign Demand Driving Credit Spreads Tighter

By Mark Heppenstall | March 23, 2017

Despite recent signs of accelerating growth and inflation in the global economy, central bank monetary policy remains very accommodative. Short-term rates are stuck near or below the zero-level across most of the developed world, and more than $8 trillion in sovereign debt still trades with negative yields. Even BB-rated Portugal can issue 2-year bonds at just over 50 basis points (bps) today, less than half the rate paid by 2-year on U.S. Treasury notes.

Fed Takes a Dovish Tone While Raising Rates

By David O'Malley | March 20, 2017

As expected, the Federal Reserve (Fed) raised the Federal Funds rate by 25 basis points (bps) last week. The increase came with a dovish tone regarding the pace of future increases, and sent risk markets soaring and treasury yields lower following the announcement.

Signals to Watch Through the Current Fed Rate Hike Cycle

By John Swarr | March 15, 2017

The Federal Open Market Committee (FOMC) is set to release its policy rate decision today at 2:00PM EST. The broad market consensus is the Federal Reserve (Fed) will raise the federal funds rate by 25 basis points (bps) this afternoon. However, market participants will also be anticipating the release of the “dot plot,” which FOMC members use to signal their outlook for the number and timing of future policy rate increases. The dot plot was last released at the December 2016 meeting, and the median dots showed three 25 bps rate hikes for 2017. Although the dots can help investors understand what FOMC members are thinking, the dot plot can differ from the market’s forecast of future short rates in the Eurodollar futures market.

Is the Fed Behind the Curve with Interest Rate Increases?

By David O'Malley | March 13, 2017

Last week’s strong employment report makes it almost certain the Federal Reserve (Fed) will increase interest rates by 25 basis points (bps) at its meeting this Wednesday. The February employment report showed strong gains in job creation. Non-farm payrolls increased by 235,000 for the month, which was stronger than the expected 200,000 increase and surpassed the average increase of 180,000 for the past six months. As a result, the unemployment rate decreased by 0.1% to 4.7%.

Opportunities in a Smaller Non-Agency RMBS World

By Jason Merrill | March 9, 2017

The non-agency residential mortgage-backed security (RMBS) sector continues to shrink with outstanding debt totaling $843 billion at the end of 2016, down from the peak of $2.7 trillion at the end of 2007. Issuance has yet to return to pre-crisis levels. Issuance in 2016 was at $84.2 billion, compared to $1.3 trillion per year in 2005 and 2006. Despite the non-agency RMBS sector’s inability to meaningfully return to its pre-crisis volume, a number of new post-crisis subsectors have been created by banks and non-bank issuers to try to jump start the sector.

February Employment Data will be Key in the Week Ahead

By David O'Malley | March 6, 2017

Last week saw the equity market hit new highs as economic optimism abounded after President Trump addressed a joint session of Congress. Continued expectations for significant fiscal stimulus and corporate-friendly tax policy have kept stocks well-bid since the election. With the S&P 500 Index up over 11% since the election and more than 6% since year-end, stocks have seen tremendous gains with very little pullback since November. It is now essential the administration and Congress deliver in market expectations.

High Yield Retailers Send Distress Signal

By Greg Zappin | March 2, 2017

The high yield market continues to be a strong relative and absolute performer, up about 2.5% year-to-date (YTD) following a greater than 18% total return in 2016. Virtually all sectors have generated positive excess returns this year, except one: retail. The J.P. Morgan U.S. High Yield Index has tightened 28 basis points (bps), while the retail sub-index has widened 100 bps YTD. Often it pays to be a contrarian and add to sectors that are out of favor and have materially underperformed. However, the situation in retail is neither cyclical nor supply driven.

Disclosure Statement

The material provided here is for informational use only. The views expressed are those of the author, and do not necessarily reflect the views of Penn Mutual Asset Management.


This material is for informational use only. The views expressed are those of the author, 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.

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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