Market Commentary Q2 2023

Introduction Ellington Income Opportunities (EIO) performance was positive in the second quarter despite broader market volatility. During the quarter, regional bank instability as well as a potential United States default dominated headlines. Immediate concern over both risks subsided by quarter-end, boosting risk appetite, even as interest rates were driven higher by hawkish Fed sentiment. The…

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Market Commentary Q3 2022

Introduction  Ellington Income Opportunities (EIO) performance was relatively flat in the third quarter with volatile market conditions persisting. After rallying in late July and the beginning of August, interest rates and credit spreads sold off as investors priced in hawkish central bank developments. Credit spreads, as measured by the corporate high yield index, tightened over…

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Market Commentary Q2 2022

Introduction  Ellington Income Opportunities (EIO) generated negative performance in the second quarter with extreme volatility across capital markets. From interest rates to credit, a large repricing of risk has occurred across markets as the prospect of a less supportive Federal Reserve and potential for a recessionary environment quickly shifted market attitudes towards defensive posture. Intra-quarter,…

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Market Commentary Q3 2021

People at a desk reviewing financial documents

Introduction  The early months of the third quarter were characterized by slower trading volumes after nearly 18 months of frenzied activity post-March 2020. However, trading activity picked up as summer came to a close and volatility returned to the markets. The yield on the 10-year U.S. Treasury note closed nearly 18 basis points (bps) higher…

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Income Opportunities in Rising Rate Environments

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Introduction  The most recent round of quantitative easing has flooded the fixed income markets with cash, pushing the most commoditized sectors of the bond market to historically low yields and tight spreads.  Bond investors with allocations to corporate-focused funds have experienced very strong returns over the past twelve months which may come at the expense…

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Opportunity Zones: Potential Impacts on Structured Credit Markets

Cranes and tall buildings

The Tax Cuts and Jobs Act of 2017 (the “Act”), perhaps the biggest legislative victory of the Trump Administration to date, re-wrote much of the country’s tax code, lowering both individual and corporate tax rates while amending various deductions for the first time in over thirty years. Initially, media and public attention were largely focused…

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Falling Rates: Impacts on the Structured Credit Markets

Financial chart

As the U.S. economy continued to strengthen in 2018, the Federal Reserve raised its benchmark interest rate four times. With the market pricing in additional future hikes, interest rates rose throughout the year, culminating with the 10-year U.S. Treasury yield reaching 3.24% in November, a level not seen in over seven years. The steady march…

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Auto Lending: What to Make of the Recent Increase in Delinquencies?

Person signing a contract

In the years immediately following the 2008 financial crisis, the availability of consumer credit tightened dramatically. As a result, the personal balance sheet of the average American improved as consumers were forced to de-lever in the absence of financing options. However, while mortgage credit issuance, the largest form of consumer credit, came to a virtual…

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