5 min readThe longest government shutdown in history is already having a significant impact on the economy. Equally important, but less well understood, is the potential impact on negotiations over the March 1 deadline to raise the U.S. debt ceiling. As President Trump has continued to insist on a $5.7 billion allocation towards construction of a border…
14 min readCo-authored by: Matthew Paniati Abstract The past few years have been mostly predictable for investors, with an expanding economy accompanied by steadily rising interest rates and asset prices. In this two-part series, we examine some recent developments and their implications for the current environment. In part two, we look at the current state of fiscal…
12 min readCo-authored by: Spyros Qendro, CFA Abstract The past few years have been predictable for investors, with an expanding economy accompanied by steadily rising interest rates and asset prices. In this two-part series, we look at some recent developments and their implications for the current environment. In part one, we look at recent equity market volatility,…
6 min readIs an inverted yield curve still a reliable predictor of an impending recession? And will the recent flattening yield curve affect bank credit quality? Currently, with the narrowest spread between the 2-Year U.S. Treasury bill and the 10-Year U.S. Treasury note since the 2007 recession, both those questions are on the minds of treasury professionals…
2 min readThe great paradox of 2017 was the relative calm in short-term debt markets in the face of unprecedented turbulence in the daily news cycle. Our new President’s unconventional communication style did not lead to the financial market volatility many had predicted. And despite ongoing partisan political turmoil, multiple terror incidents, an uncertain start to Brexit,…
4 min readAbstract At the start of each year, we typically name three broad market trends or events that could potentially have the greatest impact on the short-term debt market. For 2018, we think central bank tightening, tax reform and event risk will have the most impact on short-term debt markets. We are generally sanguine about the…
3 min readAbstract Debt limit negotiations often go down to the wire, generating headline risk and investor uneasiness. The yield on T-bills maturing around default date may be substantially higher than those maturing in neighboring months. The exponential growth in government money market funds since the 2016 regulatory reform increases contagion risk should shareholders and portfolio managers…
5 min readPerhaps no word better describes the start of 2017 than “transition.” The year began with the White House’s transition from the Obama to the Trump administration, continued with the rise of European populism, and recently culminated in the official beginning of Britain’s transition out of the European Union. Somewhat less noticeably, change is also taking…
4 min readWhen British citizens voted to leave the European Union last June, markets reacted strongly: the pound dropped 11%, the FTSE 100 (an index of British stocks) fell 9%, and equity markets from the United States to Japan sold off as well. Although much of the value lost in these markets was recovered quickly, the Brexit…
5 min readPotential sweeping changes in fiscal and monetary policies, a new order in international relations, and ongoing political conflicts are creating heightened uncertainty for institutional cash investors in 2017. The eventful first weeks of the Trump administration saw a rapid succession of executive orders impacting healthcare, trade, hiring, energy, education, border security, national defense, and numerous…