With solid fundamentals and fair valuations in a period of weak technical factors, select Agency MBS appears relatively attractive.
A sharp December selloff highlights the need to remain vigilant.
Loan investors learned about illiquidity during December’s volatility, but careful positioning can still add value.
Volatile market conditions call for a focus on loss-remote, amortizing bonds and CRE-CLO deals with proven sponsors.
As we near the end of the current expansion cycle, investors will continue to see attractive real estate debt opportunities.
While high-yield bond spreads have recovered some of the ground they lost in the fourth quarter, we caution against adding too much spread duration at this point in the cycle.
Complacent markets learned a valuable lesson in December as panicked investors found buyers had vanished.
Municipal bonds weathered fourth quarter volatility better than other fixed-income sectors, but careful selection remains key.
Wider spreads and inconsistent liquidity belie positive long-run fundamentals.
With one more rate hike expected by our macro research group, we believe this is the beginning of the end of the upward move in rates.
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