Insights

Income Opportunities in Rising Rate Environments

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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Market Commentary Q2 2020

Introduction  Financial markets rebounded sharply as the Federal Reserve continued its stabilization efforts. The Fed’s swift and aggressive response, a multi-pronged stimulus effort involving both asset purchases and lending facilities, drove most asset prices higher. Initially concentrated in sectors directly targeted by the Fed’s intervention, the recovery eventually seeped into adjacent markets as investors were…

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Market Commentary Q1 2020

Report Highlights While the turmoil of March was difficult to navigate, it ultimately should present us with a compelling investment landscape for the foreseeable future. Far too often in periods of distress in structured credit, the market paints an entire sector with too broad a brush, overlooking structures that are resilient against the economic backdrop….

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Opportunity Zones: Potential Impacts on Structured Credit Markets

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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Tariffs: Understanding the Effects on the U.S. Housing Market and Structured Credit

Tariffs and trade embargos have been a key piece of U.S. foreign policy for much of our history. From the nation’s founding through the early part of the 20th century, tariffs were regularly imposed to protect U.S. economic interests. While protectionist policies took a step back in the post-World War II era, they have come…

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Student Loan Debt: Impacts on the U.S. Housing and Structured Credit Markets

At $1.52 trillion outstanding, student loan debt is now the second largest form of consumer debt in the United States, behind only residential mortgages. This growth has been particularly pronounced among young borrowers. Between 2005 and 2014, average real student loan debt per capita for individuals aged 24 to 32 doubled from $5,000 to $10,000,…

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Falling Rates: Impacts on the Structured Credit Markets

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?

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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Government Shutdowns: Analyzing the Economic Impacts of a “New Normal” Negotiating Tactic

On January 27, 2019, President Donald Trump signed a stopgap bill to fund the federal government for three weeks. The bill ended the longest government shutdown in history, which kept 800,000 federal employees out of work for an unprecedented 35 days and shuttered most federal agencies. The prolonged shutdown was the result of partisan gridlock…

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Brexit: Potential Impacts on U.K. Housing and Structured Credit

The United Kingdom’s (UK) decision to leave the European Union (EU) by referendum in June 2016 (“Brexit”) has been dominating global news headlines ever since, not least due to the closeness of the vote (51.9% v 48.1% leave/remain), but also due to the fact that even now, almost three years since the referendum was first…

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