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Economic and Market Commentary

Below investment grade rated corporate credit securities have higher yields than investment grade securities, but does that translate into higher total returns?

At Boyd Watterson Asset Management, one of our core beliefs when it comes to managing fixed income portfolios is there are certain parts of the corporate credit market that offer more favorable characteristics than others. We refer to the BBB-BB rated portion of the corporate credit curve as “mid-grade,” as they fall in the middle...
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Have interest rates been increasing? That depends on which interest you look at.

The FOMC started raising the Fed Funds Rate on December 16, 2015.  The FOMC did not increase the Fed Funds Rate again until December 14, 2016 but started to implement rate increases on a more regular basis going forward until December 19, 2018.  As shown in the table below, the 3-month Treasury Bill has increased...
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The S&P 500 reached a new high, which has made the headlines. However, what is not reaching a new high may be the most interesting news.

On April 26th, the S&P 500 closed above the prior all-time high set on September 21st of last year. While that is noteworthy in terms of history, it also means that the S&P 500 has returned essentially 0% over that time frame. Since the prior high on January 26, 2018, the S&P 500 is only...
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Steady and strong demand for municipals in 2018 has continued into 2019.

In 2018, municipals saw steady and strong demand across all maturities and sectors despite the heightened volatility in the taxable markets.  Even as yields moved higher, the supply/demand imbalance in the municipal market provided enough support for investment grade municipals to post positive returns for the year. In 2019, we have continued to see a...
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Consumer and real estate markets look to be in better health than corporations.

As mentioned in prior posts, we currently have a more favorable view on the fundamentals of the consumer and commercial real estate market than the corporate market.  To express that theme, we favorably view assets that have exposure to the consumer and to real estate.  In general, the consumer is in good financial shape due...
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In the Eye of the BBB-Holder

Since the financial crisis, the BBB-rated cohort has increased significantly. We acknowledge the recent credit quality concerns in the investment grade credit market, but we do not believe that all BBBs should be painted with the same brush.
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The Government Shutdown and the Impact to Commercial Real Estate

As the government shutdown nears its fourth week, what can investors in commercial real estate expect from the second longest shutdown in U.S. history?
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Have the Fundamentals Changed?

As of October, and into November, the equity markets have experienced a wide spread sell-off due to several factors. In this post, we take a look at corporate fundamentals to gain insight into what is taking place in the market and why.
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What is Driving the Shape of the Yield Curve?

The Treasury yield curve is close to inverting when looking at the 2-year to 10-year spread. Is this signaling a recession within 24 months? Is this the appropriate measure? Or is the Funds Rate or T-Bills to 10-year spread a better indicator of curve “flatness”? A brief look back at past curve inversions can provide...
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Take What the Market Offers

Our belief is that investment returns are significantly driven by macro factors such as inflation, economic growth, credit cycles, the level and direction of interest rates, equity multiples, and cap rates. We, at times, need to make minor adjustments to our strategies to ensure we are making the most of what the market offers.
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