“Typically when the default rate is 1% or more above the Moody’s forecast, it is a good time to own distressed bonds," Martin Fridson, CFA, said. "Similarly, if the bonds are priced 1% or more below Moody’s, then the distressed bonds are priced too tightly (i.e., a signal to sell).”
In the current low-rate environment, there is reason to wonder about the viability of banks, insurance companies, and indeed any institution that generally depends on the spread between long- and short-dated liabilities for its profits, says David Schawel, CFA.
Jason Voss, CFA, provides his choices for Weekend Reads for Investors. This edition discusses the decline of US productivity, the little-known but important Sykes-Picot Agreement, and sleeping trees.
In my previous life, as a reporter for the Financial Times, I did a stint covering philanthropy. I heard a lot about social entrepreneurship, philanthrocapitalism, and the ways that some philanthropists and nonprofit organizations were tackling some of the world's toughest, seemingly intractable, social ills.
Janet Zhang shares two key insights from the 10th Asian Bond Markets Summit in Beijing: There is still ample room for China's bond market to develop but China's corporate bonds are quite different from those in the developed markets, so foreign investors should understand their subtleties before investing.
Observant readers will have noted that various sell-side researchers and other market commentators have mentioned “convexity hedging” as something that could exacerbate a selloff in UST rates. Here I take a high-level look at what convexity hedging is and how it affects the UST market.
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