3 min readAbstract The almost comical sounding term “Operation Twist” has been creeping into the financial media since last December as Federal Reserve officials and market commentators discussed innovative ways to revive the stagnant economy. This phrase became a household name on September 21st, when the Federal Open Market Committee (FOMC) decided to simultaneously buy $400 billion…
1 min readAgainst a backdrop of declining US growth projections, all eyes were on the Fed last week as they considered new policy initiatives designed to impact the cost of borrowing. Under consideration was the QE3 balance sheet expansion, as well as more politically palatable options, such as reducing the interest rates paid on excess reserves held…
2 min readGreek debt crisis…Spanish banks…U.S. debt ceiling impasses…July certainly had its share of rollercoaster news for the markets to digest. As an investment manager of corporate cash, we focus on how our buy list of securities should be adjusted given the backdrop of these types of developments. While much of this news has been developing for…
3 min readAbstract The U.S. debt ceiling situation remains fluid, but we believe that a U.S. default is an extremely remote possibility. A ratings downgrade from AAA may be more likely due to the diminished prospect of a credible deficit reduction path. Market implications of such a downgrade may be greater than merely higher borrowing costs for…
3 min readAbstract Recent events related to government sponsored enterprise (GSE) reform have prompted short-duration investors to question the level and nature of government support for their debt issuance after December 31, 2012. The housing GSEs play a critical role in the U.S. mortgage market, representing 99% of all new mortgage-backed securities (MBS) issuance in recent years….
2 min readContinuous improvement in the U.S. economy is now leading the government to explore the exit strategies that will eventually wean the economy from the multitude of support programs enacted during the worst of the credit crisis. In Federal Reserve Chairman Ben Bernanke’s recent Humphrey Hawkins testimony, the Chairman went to great lengths to assure the…
2 min readFederal Reserve Chairman Ben Bernanke recently laid out his plans to lawmakers on how the Fed will eliminate programs, when needed, which pumped hundreds of billions of dollars into the financial system. In an op-ed piece for the Wall Street Journal, he wrote that the strategy is ready to be put to use, but noted…
2 min readExecutive Summary Investment Considerations: Government Sponsored Enterprises Government Money Market Funds FDIC TLGP Guaranteed Debt Foreign Government Guaranteed Debt Beware Certain “Industrial” Credits Institutional cash investors found themselves in a pickle when the market’s desire for safety made treasury securities and treasury money market funds inaccessible. However, when the default option is no longer an…
1 min readIn real estate investing, we all know the old adage is location, location, location. And, as an extension, the three most important factors we’re looking to for signs of stabilization in the credit market are housing, housing, housing. Over the past 12 months we have seen national home prices plummet 15.5%, existing home sales decline…
3 min readIntroduction In a move to restore confidence in the U.S. mortgage market, President George W. Bush signed into law on July 30th, a housing rescue bill that includes a provision for the U.S. Treasury Secretary to inject capital into Government Sponsored Enterprises (GSEs) through direct stock or debt purchases.. The birth of the so called…