The Debt Ceiling Game is On
The X Date is live. We now have an idea of the date on which the United States will run out of money unless the debt ceiling is raised or suspended. Treasury Secretary Bessent informed Congress last week that it would be in August, thus teeing up a made up “crisis” that occurs periodically, grabs […]
Beyond the News—TBAC: Treasury and the Bond Dealers Do a Kabuki Dance
TBAC, the Treasury Bond Advisory Committee, is an obscure body. Even those immersed in the fixed income markets may not pay it much attention. But four times a year this group of bond dealer representatives meets with Treasury officials to provide input into the government’s massive and growing debt issuance plans. It’s a kind of […]
Why Do Investors Discount Credit Risk?
The markets are awash in headlines about economic uncertainty and the rising prospect of recession, but these forces have barely moved measures of credit risk. Credit backed instruments are a significant part of public funds portfolios. The Federal Reserve estimates that state and local governments held $561 billion of commercial paper and corporate bonds at […]
Beyond the News: Risk, The New Obsession.
I’ve been thinking a lot about risk these days, and so should you. Some investment folks are paid to bet on risk (think hedge fund managers). For them, more risk is better—they just want to bet on the right side. But almost without exception public funds investors are expected to avoid risk, or at least […]
Something’s Up in Texas
Local government investment pools have flourished in Texas and its local governments have benefitted from the highly competitive marketplace that provides a myriad of options, many at very low cost. But recently the industry has attracted the attention of state legislators who have introduced bills that would alter the landscape, likely to the detriment of […]
The Week After
You can’t ignore the massive market selloff last week, even if cash pools and short-term fixed income portfolios escaped the worst. Equity markets bore the brunt, losing 10-15%. (That selloff continued this morning.) By contrast the fixed income markets seemed a calm and sheltered place. Yes, bond yields fell but the change in short term […]
New Bank CD Benchmarks Provide Transparency to The Market
The collateralized CD market has been a black box for public agencies, where useful information on rates has been hard to come by and public agencies are hampered in assessing relative value. We’ve created a series of new investment benchmarks to address this by tracking rates that banks pay for collateralized public funds deposits. It […]
The Fed Said Nothing Has Changed Except. . . The Markets Are Happy, for Now.
Sometimes meetings of the Federal Open Market Committee bring great market changes, sometimes not. Yesterday’s meeting was a Not. Bottom line: the Fed said not much and investors, skittish over market direction, were relieved, with both equities and bonds rising in price after the meeting’s concluding announcement. Most public funds investors limit their involvement to […]
A Bond Fund that Isn’t
If you ask a local government investor what additional offering they might use, they often respond that it would be a fund that invests in longer-maturity investments but allows them to redeem their shares at par whenever they want. Anyone who has taken Investments 101 knows that this is (usually) an impossibility. Investing beyond the […]
Unsettled Times, So Hunker Down
Last week’s Research Note “The R Word” perhaps seemed a bit off track to some folks, but the above chart, published Friday by the Atlanta Federal Reserve, captured a lot of eyes. It looks eerily like the same chart in the first quarter of 2020 when Covid shut down the markets and the economy in […]