Fed Shift from “Put” to “Collar” Bodes Well for Spread Product

Robert Tipp, CFA, Managing Director, Chief Investment Strategist, and Head of Global Bonds

The Federal Reserve appears to have implicitly adopted a “market-collar” approach, becoming more accommodative when markets become too risk averse (the well-recognized “Fed put”) and removing accommodation if markets become too ebullient (the “Fed cap”). In this paper, we discuss the result of the Fed's "market-collar", which may well be a prolonged economic expansion with perhaps a volatile, but extended, cycle for spread-product outperformance versus government securities.

The Outlook for the Trade War: Assessing President Trump’s Next Move

Nathan Sheets, PhD, Chief Economist and Head of Global Macroeconomic Research

With the trade negotiations between the United States and China appearing to gain traction, it’s useful to step back and consider the outlook and prospects for the trade war. What are the key factors shaping President Trump’s choice set? What are some possible outcomes for the year ahead? And what does it mean for markets? This paper includes our observations regarding President Trump’s incentives and some lessons that we have drawn from his actions over the past year.

Recent Thought Leadership

Venezuela at the Crossroads

Mehill Marku, Senior Investment Strategist

Nicolas Maduro’s rule appears to be approaching its end, but the exact timing and path of the political transition remains uncertain despite the strong momentum behind the anti-government protest.  Geopolitical rivalries, foreign influences, military interests, and doubts about the protest movement’s staying power suggest that the restoration of democracy in Venezuela will likely be hard to achieve without a strong diplomatic and economic commitment by the U.S. and its allies.

Is Your LDI Strategy Recession Ready?

Tom McCartan, FIA, CFA, Vice President, Liability-Driven Strategies

In this paper, we discuss the key risks to a U.S. corporate pension plan's funded status--declining long-term interest rates, tightening long-dated corporate spreads, credit migration, and falling risk assets--and shares practical steps plan sponsors can take now to protect funding levels ahead of the next recession.

Weekly View: Opportunities Along Steep Spread Curves

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