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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.

Staying Focused on the Big Picture

By David O'Malley | May 22, 2017

Over the past few months, I have been asked many times how to factor the news cycle and developments in Washington into market expectations. My view on this has not changed with the events of the last few weeks. If you are a long-term investor, you have to look past the short-term noise that is the news – be it political or financial – and stay focused on the primary drivers of the market, including valuation, economic growth, monetary policy and regulation. If you are a trader, you need to be more aware of the noise, but recognize it can be extremely difficult to predict. As a result, I have always tried to discount news items or reduce my trading in times of significant event risk.

French Election Alleviates Global Market Uncertainty

By David O'Malley | May 8, 2017

Yesterday the French election concluded with Emmanuel Macron defeating Marine LePen by approximately 30%. The convincing victory should ease concerns in France and across the globe that the European Union would be called into question. Macron, the centrist candidate who has a business background, now has the daunting task of trying to jumpstart France’s economy. The French unemployment rate currently stands at 10% versus 4.4% in the U.S.

Stocks Rally on French Election

By David O'Malley | April 24, 2017

The results of the first round of French elections sent stocks around the world higher in early trading on Sunday. Emmanuel Macron and Marine Le Pen will advance to the… Read More

Quiet but Risky Market for Investors as Low Volatility Persists

By Zhiwei Ren | April 20, 2017

The equity market has been very quiet so far in 2017. Year-to-date, the S&P 500 has posted a daily decline greater than 1% only once (on March 21), and the realized volatility for S&P 500 has reached the lowest point in the last 50 years.

The backdrop for the low volatility is widely recognized: the U.S. economy is growing a little above trend, a new pro-growth president was elected, inflation is rising but still remains low, the risk for a hard landing in China is lower, Europe and Japan are growing at the fastest pace post-crisis, and most importantly, low inflation allows the Federal Reserve (Fed) to intervene whenever we have some volatility in the market.

Geopolitical Risks Upset Markets

By David O'Malley | April 17, 2017

Geopolitical issues took center stage last week as stocks fell again and Treasury bond yields dropped to their lowest level in 2017, as tensions surrounding North Korea and with Russia over the U.S. attack in Syria had market participants worried about the impact of the Trump administration’s domestic agenda.

Could 2017 Mark the Return of the Tech IPO?

By Trevor M. Williams | February 9, 2017

2016 marked the slowest year for global technology initial public offerings (IPOs) as measured by both number and value in at least the last five years. The combination of uncertain market conditions, high private valuations and ample cash hordes allowed many companies to wait until public markets offered a more favorable environment. After a slow start, global technology IPOs recovered slightly in the second half of the year. We’re now entering into an environment that looks to be highly favorable for companies seeking to go public.

What is the Consensus Market View?

By David O'Malley | February 6, 2017

Last week was fairly uneventful from a market data perspective, as all eyes continued to be glued on Washington and the almost constant coverage of the Trump administration. On the economic data side, the unemployment report confirmed the continued creation of new jobs. Stocks and bonds gained on the jobs report, as job growth without inflation helped support asset valuations.

Economic and Market Review for 2016

By Mark Heppenstall | January 10, 2017

The markets hit record highs in 2016, and we are taking a look back at the factors that influenced the U.S. and global markets throughout the year with a comprehensive economic review of 2016.

2017: A Year of Market and Economic Uncertainty

By David O'Malley | January 9, 2017

2017 began with significant uncertainty surrounding the implications of the major geopolitical changes that happened during 2016. In the next few weeks, we will learn more from the British Prime Minister on the process to withdraw from the European Union. On January 20th, Donald Trump will be sworn in as the next President of the United States. The impact of these two changes in the global environment will most likely drive the course of markets during the year ahead.



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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