TURNKEY SOLUTIONS FOR WEALTH MANAGER AND FUND MANAGER
The markets are anything but calm at the moment, and this applies to all asset classes. We are feeling comfortable in this environment right now, as our absolute return philosophy and draw down risk management is in full effect. The Alpinum Alternative Investment Strategy is up YTD +3.2%, thanks to selective allocations in differentiating, defensive […]
Alpinum Alternative Investment Strategy – Downside Resilience Read More »
Yields of US short term low grade bonds broke through the 10-years average of 5.7% and reached a level slightly above 7% in early May. The yield curve steepening by more than 200 bps over the last 6 months (please see chart 2 in the Alternative Credit Letter) has been the main driver of the
Short Term High Yield Rates are attractive again @ 7% p.a. Read More »
In macro-finance, it is well known that an inverted yield curve is signalling a recession or at the very minimum, it is indicating that the economy is operating in a late cycle. For example, the 2-year/10-year Treasury slope has inverted in advance of 7 of the past 8 recession periods. However, it is a less
Yield curve inversion signals economic weakness ahead of us Read More »
An interest rate swap is an agreement between two parties to exchange fixed and floating interest payments with each other over a specified period of time. At the time of the swap agreement, the total value of the fixed rate flows of the swap equals the value of the expected floating interest payments. This causes
EUR Swap rates soar and put pressure on short-term bonds Read More »
Within a matter of only two weeks, European High Yield spreads have jumped to a spread level of 480 bps, well above the last 5 years average of 366 bps and back at August 2020 levels. Sectors such as “food & beverages” or “chemicals” performed the worst given the spike of commodity prices in general
Credit spreads spiked to August 2020 level in two weeks! Read More »
Looking back at the last rate hike cycle (2015-2018), credit spreads for both high yield and investment grade bonds (see blue line) were not immediately negatively affected when the Fed rates started to take off. However, the more mature the economic cycle became, the stronger the negative effect was, as reflected in the widening of
Credit spreads widen most when economic cycle is mature Read More »
Since the beginning of 2021, breakeven inflation has risen sharply, and has reached almost 3% at the end of October, while breakeven inflation has been relatively steady at Investors have somehow learnt to deal with low or negative nominal yields. But now, as US real yields fell to record low levels such as -6.8% in
Real rates reach record low levels of -6.8% in USD Read More »
Since the beginning of 2021, breakeven inflation has risen sharply, and has reached almost 3% at the end of October, while breakeven inflation has been relatively steady at around 2% over the past decade. Despite the rise in inflation this year, Treasuries have not moved to previous levels of 2.5%. Therefore, concerns about a stagflation
Is inflation about to peak? Read More »
Leveraged loans continued to perform well during the recent risk-off mode and upmove in interest rates, while US high yield bonds were negatively affected. The floating rate feature in leveraged loans offers a clear advantage to longer duration high yield bonds. In addition, leveraged loans offer a similar credit spread and only a slightly lower
Loans performed well, while high yield faced some headwinds Read More »
The term “mean reversion” assumes that numbers will tend to converge or normalize to the long-term average over time. In economics mean reversion is often referred to GDP growth, interest rates and inflation. In finance it is often referred to earnings growth and valuation multiples, such as price-earnings (P/E), price-to-book (P/B) and price-to-sales (P/S). The
Long-term equity return expectations Read More »
