14 min readCo-authored: Alexander Goldman Abstract The inclusion of A2/P2 commercial paper (Tier-2 CP) in institutional cash portfolios may help improve income potential and diversify risk. Data suggests that Tier-2 CP offers meaningful yield enhancement relative to comparable benchmarks and Tier-1 CP. Following the SEC’s Rule 2a-7 money market fund reforms, direct investment in Tier-2 CP has…
15 min readIntroduction: Why GSE Privatization Matters to Investors Given their oversized role in home mortgages, any discussion of Fannie Mae and Freddie Mac’s potential privatization tends to capture investors’ attention. Recent developments suggest that the Trump administration is exploring plans to sell the government’s stakes in the government-sponsored enterprises (GSEs) through an initial public offering (IPO)…
3 min readIntroduction Market volatility has been elevated following the White House’s tariff announcement on April 2nd. While the source of this heightened volatility is unique from past periods, it may still be prudent to look to the past for evidence of how to operate in the current environment. For cash investors, we posit some principles that…
19 min readIntroduction By Lance Pan, CFA 2024 was a remarkable year for financial markets in many respects. The estimated 2.7% growth in real gross domestic product (GDP) nearly doubled the Federal Reserve’s median projection of 1.4% a year earlier.[1] The S&P 500 stock index rose 23.3% on the heels of an equally impressive gain of 24.2%…
10 min readAbstract Changing credit landscapes, more complex financial products, multiple touchpoints with large financial intermediaries, and high profile bank failures are just some of the challenges treasury management professionals and cash managers face in counterparty risk management. An effective counterparty strategy should provide clarity on the counterparties’ credit strength individually and collectively, and have a desired…
2 min readInsight on the economy and your cash portfolio At the end of last year, we published a Quarterly Cash Update which provided a recap of the markets in 2023 and discussed the possibility that we had reached an inflection point in which interest rate cuts would begin in 2024. As we begin Q2 of 2024,…
3 min readAnother Record Month for the Corporate Bond Market The investment-grade corporate bond market hit a record for new issuance for a second straight month in February. Blue-chip companies sold a February record of $195+ billion of bonds last month, topping the previous February 2023 record of $150.9 billion. Approximately $50 billion of bonds were sold…
14 min readMinutes from the December FOMC meeting indicated that some Federal Reserve officials wanted to begin discussing “slowing the pace” of securities runoffs on its balance sheet. Federal Reserve Chairman Jerome Powell confirmed after the January meeting that the Committee will begin formal conversations on the topic at its March meeting. The indication of an end…
3 min readLabor Market Steady with Signs of Slowing The December employment report was mixed: although non-farm payrolls came in higher than expectations at 216,000, there were 845,000 people who left the labor force, the largest drop in the labor force participation rate since January 2021. For 2023, there were a total of 2.697 million jobs created…
2 min read2023 Recap Despite the majority of market participants forecasting a recession in 2023, GDP rose over 2% in both the first and second quarters and jumped 4.9% in the third quarter, while both equity and fixed income markets had positive returns in 2023. The resilient consumer, cooling inflation, and the Fed’s pivot to deeper 2024…