Retirement is, for many, the culmination of their life’s work. As their financial advisor, you’ve been helping your clients strategize and plan for that milestone. But what happens if what you’ve been planning for changes right before the goal line? We’re seeing that today in the world of retirement income.
Investment grade muni spreads tightened significantly since March, but still remain elevated in some areas versus historical averages.
In our view, January may prove to be a microcosm of the new year. Optimism abounds for progress against the pandemic and a rapid economic recovery, but challenges remain on both fronts.
A new coronavirus strain first observed in the United Kingdom, which is believed to be significantly more contagious, has spread across borders and been observed in the U.S. in several states.
In our view, while elections have consequences, the consequences are rarely as stark or as predictable as prognosticators suggest.
In our view, while economic data has been generally improving, higher frequency data such as elevated jobless claims and small business employment highlight the risk that the recovery could stall absent additional fiscal stimulus. Given tensions and political posturing entering the last stages of election season, short-term we believe risk premiums should be higher on the margin until resolution of the election.
Fed policymakers will not tighten monetary policy until inflation remains above 2% and job gains are robust.
On September 16, 2020, the U.S. Federal Reserve (Fed) left interest rates near zero and signaled that it expects to hold them there through at least 2023, adding outcome based guidance. The statement follows the new long-term policy framework announced by Chair Jay Powell in August at the Federal Reserve Bank of Kansas City’s annual Jackson Hole conference. The Fed notes that rates will remain near zero “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.” We didn’t get a precise definition of what a moderate overshoot would look like, allowing the Fed to retain some flexibility.
In our view, in a landscape of improved risk sentiment and strong demand for yield, U.S. corporates appear attractive even noting the recompression of spreads since the first quarter. While corporates have retraced a significant portion of their year to date widening, other sectors and asset classes have gone further, leaving corporates relatively well positioned.
Lower CLO issuance and slowing loan downgrades, along with some attractive yields, have produced value in certain CLOs.
In our view, monetary and fiscal policy have done a tremendous job in papering over fundamental uncertainty. Read more for the news & nuggets
We focus on the strong recovery in the muni market over the second quarter, which proved to be illuminating to municipal investors on a couple fronts.