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Commentary

Market Review & Outlook - Investment Grade: Taxable and Tax-Exempt Fixed Income

> Rising short-term rates dampened total returns in the investment grade-taxable market in the second quarter as the yield curve continued to flatten. A flatter curve does not mean that recession is imminent, though so-called “synchronized global growth” appears to be at an end.

> The tax-exempt municipal bond market continues to digest the effects of the new tax law as banks and insurance companies became active sellers, and the elimination of advance refundings resulted in diminished supply.

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2Q 2018 Leveraged Finance Market Outlook

The high yield market eked out a positive return in the second quarter while issuance continued to decline and flows to mutual funds and ETFs remained negative. Defaults remained about even with last year, at 2.06%, while credit quality continued to improve.

The leveraged loan market posted a return of 0.78% for the quarter, continuing the trend of the first quarter. Issuance continued to be robust, hitting the second-highest level on record, and demand remained strong.

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Market Review & Outlook: Leveraged Finance

The high yield sector posted a negative return for the first quarter driven by rising U.S. Treasury rates. At current valuation levels, we believe there is limited potential for spread tightening. Our focus is on quality over yield though we will take advantage of market volatility to seek potential opportunities for incremental yield.

Leveraged loans delivered a positive return in the first quarter. Loans are performing as expected in the current market environment – protecting investors from rising interest rates.

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Seix Perspective

2018 Volatility Regime Change
The dominant themes in the second half of the year continued to be the lack of volatility (stock and bond volatility plumbed to record lows) and a loosening of financial conditions, which allowed the Federal Reserve (the Fed) to continue to raise the federal funds target.

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Jim Keegan on CNBC's Closing Bell

Jim Keegan, Chief Investment Officer of Seix Investment Advisors, provides his perspective on recent market volatility and the outlook for interest rates.

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A Compelling Case for Leveraged Loans

Seix Investment Advisors believes there are a number of compelling reasons to invest in leveraged loans. In the current market environment, when most assets are trading near historically high levels, loans remain attractive on a risk-adjusted basis compared to other asset classes.

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Seix Quarterly Review

Financial Conditions, Inflation and Central Bank Shifts

The last year has been interesting to say the least with the first half of 2017 a continuation of the “expect the unexpected” theme. From Brexit and the Trump election to the snap election in the UK earlier this year...�

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What Global Synchronized Expansion

Consensus is building around the notion that economic growth is now synchronized across the globe’s largest regions for the first time in many years.

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Municipal Market Update: Green Bonds

Municipal green bond issuance has increased significantly over the past four years since Massachusetts became the first state to offer tax exempt bonds designated as ‘green’ in 2013. While only a small part of the municipal market at approximately $19bn...

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Municipal Market Update: Mid-Year Update

As we approach the halfway point for 2017, tax exempt bonds have returned a solid 4.20% YTD, outperforming Treasury returns of 2.64%.

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Municipal Market Update: No Reform Coming out of D.C.?

Tax exempt bonds have had a nice rebound this year after a volatile 2016 and have returned a solid total return of 3.48% YTD. The performance has been primarily technically driven...

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Municipal Market Update: Tax Freedom Day 2017

Doing your taxes is never fun, but in “honor” of the stressful tax season, enclosed is our annual update of Tax Freedom Day from the Tax Foundation...

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Municipal Market Update: Sanctuary Cities

Soon after taking office, President Trump signed an Executive Order to cut federal funding from so-called sanctuary jurisdictions.

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Seix Quarterly Review

The Legacy of Debt and the Changing of the Guard

A review of the fourth quarter is relatively easy, stocks and spread assets rallied while risk-free rates rose. The stock market was effervescent…

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Municipal Market Update: Trump’s Infrastructure Plan

After focusing on tax reform in January’s report, this month we will explore Trump’s infrastructure plan and the possible implications for tax exempt bonds.

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Municipal Market Update: Tax Reform And Munis

The Trump election is clearly a potential paradigm shift for the U.S. economy and asset markets, and until there is greater clarity surrounding budget and policy priorities in the coming weeks and months, market volatility will likely...

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Municipal Market Update: Volatility Returns & Happy Holidays

We began 2016 with the 10yr AAA MMD rate at 1.87%, on June 26th it bottomed out at 1.29%, and then peaked at 2.58% on December 1st. The election sparked the price plunge and retail investor selling of tax exempt mutual funds...

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