Credit spreads

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Absolute Versus Relative Returns

By Greg Zappin | June 7, 2018

Credit spreads have been resilient for the majority of 2018, outperforming duration-matched Treasuries, as business fundamentals remain sound and new issue supply remains down year-over-year. However, fixed income total returns… Read More

U.S. High Yield Credit Spreads vs. S&P 500 VIX

By Scott Ellis | May 10, 2018

Market pundits often report on the “VIX” or volatility index, but when markets are weaker, it seems to be discussed even more frequently. However, despite relatively strong markets over the… Read More

Tightening Credit Spreads in a Rising Rate Environment

By Jen Ripper | March 22, 2018

Over the past year, credit spreads across the fixed income market have grinded tighter. The commercial mortgage-backed securities (CMBS) market has experienced spread tightening up and down the capital stack…. Read More

A Challenging Start to the Year for Investment Grade Corporate Bonds

By James Faunce | March 8, 2018

Despite somewhat stable credit spreads, the rates sell-off in 2018 is causing investment grade corporate bond total returns to have the worst start to a year in two decades, as… Read More

2017 Economic and Market Review

By Mark Heppenstall | January 5, 2018

Economic Growth & Inflation The ‘Goldilocks’ U.S. economic recovery has now moved beyond its 100th month with few signs of normal late-cycle imbalances or excesses to derail the current expansion…. Read More

The Grind is Real

By Jason Merrill | August 24, 2017

In spite of domestic political unrest and continued geopolitical uncertainty, the markets have enjoyed a surprising amount of stability since September 2016. Spreads have continued to grind tighter and tighter, begging the question, “how low can you go?” When spreads are at the tights across most sectors, cross-sector relative value becomes a more important form of differentiation between investments – and definitely more interesting during a summer of weak supply and low market volatility!

It’s a Cruel Summer for Alpha-Seeking Investors

By Jen Ripper | August 3, 2017

Summer conjures up warm memories of family vacations, lazy days, endless ice cream, amusement rides, walks on the beach, barbeques, and of course, occasional heat waves. Bananarama’s summertime hit “Cruel Summer,” which touches on oppressive heat, climbed the Billboard charts in 1984. Appropriately, the music video was shot during a heat wave.

For some investors, it may seem like a cruel summer with limited opportunities to generate alpha. It certainly feels like most major markets are heating up as risk premiums continue to grind tighter, leaving investors commiserating.

U.S. Corporate Bonds Are Losing Their Appeal to Overseas Investors

By James Faunce | July 27, 2017

For the last several years, we have noted the extremely strong technical backdrop supporting investment grade (IG) corporate credit spreads. With the global rate environment extraordinarily depressed from prolonged accommodative central bank policies around the world, investors have diligently been seeking yield. In fact, with the 2016 launch of the European Central Bank’s (ECB) Corporate Sector Purchase Program (CSPP) for eligible euro-denominated corporate debt, the universe of corporate credit opportunities has become even smaller, keeping spreads very firm globally.

Credit Markets: Throwing Caution to the Wind

By Scott Ellis | July 20, 2017

Many investors are struggling to find attractive investment opportunities in today’s environment. One can choose from waiting on the sidelines in cash, investing in government bonds (10-year U.S. Treasuries 2.3%), investment grade bonds (+105 basis points (bps) in the U.S.), high yield bonds (+439 bps in the U.S.) or equities (S&P 500 Index is up ~10% year-to-date) and other more esoteric and less liquid investments such as private equity, venture capital and real estate. Central bankers around the world have been using their balance sheets to buy the most liquid and least risky investments, and as a result, bringing the yields down significantly. Because of this, investors have been moving further down the risk spectrum in hopes of attaining the same returns they once were able to achieve. The central bankers’ actions have left other investors to fight for the remaining investable assets.

Beware of a Flattening Yield Curve

By David O'Malley | June 19, 2017

In a much anticipated move last week, the Federal Reserve (Fed) increased short-term interest rates by 25 basis points (bps). The Fed also outlined parameters for shrinking its $4.5 trillion balance sheet. Once the process begins, it is expected to take at least four years to reduce the balance sheet by approximately $2-2.5 trillion.



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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