WHAT WE THINK…

 

WHAT WE THINK

“At the end of Q1 it appeared investors were convinced that bond yields were heading higher as the post-pandemic V-shaped rebound was in play and higher inflation was going to be a direct corollary. Not so fast… Q2 revealed that after the knee-jerk rebound in employment, further gains would be more difficult, supply constraints would hamper growth and, perhaps most importantly, the rest of the world would be lagging the US recovery. Yields treaded water for much of Q2, but in July the yield curve started flattening such that US long bond yields are over 50 basis points below their March peaks of 2.45%; Canadian yields peaked in May and the 30-year yield is now about 40 bps below its peak of 2.19%. Although Canadian yields have generally tracked US yields, the 5-30’s Government of Canada curve is about 30 bps flatter than the US Treasury curve.”

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Q2 2021

 

 

Lorica Focused Fixed Income

“In June, bond investors decided to ignore the data, listen to the Fed and retreat from the inflation trade, buying long bonds and flattening the yield curve in the process. Through the first quarter of 2021, the themes dominating the US bond market were the strength of the economic recovery and elevated inflation, tactical short positions and asset mix shifts, all prompting the sale of bonds and steepening of yield curves. However, the recovery and inflation were and still are difficult to gauge as the pandemic has caused so many imbalances. The data has been volatile and extrapolating short term trends is fraught with difficulty.”

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June 2021 Commentary

 

Lorica Focused Corporate Bond

“Domestic investment grade credit spreads tightened in Q2 as lower volatility and investor appetite for risk assets over-shadowed lingering concerns over the durability of the economic recovery and corporate earnings. For the quarter, credit spreads narrowed by an average of 2 basis points and traded within a 5-bps range. Low volatility generally aided lower-rated (BBB-) higher yielding issuers whereas performance for other rating classes was more industry and issuer-specific.”

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June 2021 Commentary

  

Lorica Short Term Bond

“In June, bond investors decided to ignore the data, listen to the Fed and retreat from the inflation trade, buying long bonds and flattening the yield curve in the process. Through the first quarter of 2021, the themes dominating the US bond market were the strength of the economic recovery and elevated inflation, tactical short positions and asset mix shifts, all prompting the sale of bonds and steepening of yield curves. However, the recovery and inflation were and still are difficult to gauge as the pandemic has caused so many imbalances. The data has been volatile and extrapolating short term trends is fraught with difficulty.”

Read More →
June 2021 Commentary

WHAT WE THINK…
▸2021
▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014
▸2013
▸2012
▸2011
 
 
FOCUSED FIXED INCOME
▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014
▸2013
▸2012
▸2011
FOCUSED CORPORATE BOND
▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014
▸2013
▸2012
▸2011

SHORT TERM

▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014

WHAT WE THINK…

 

WHAT WE THINK

“At the end of Q1 it appeared investors were convinced that bond yields were heading higher as the post-pandemic V-shaped rebound was in play and higher inflation was going to be a direct corollary. Not so fast… Q2 revealed that after the knee-jerk rebound in employment, further gains would be more difficult, supply constraints would hamper growth and, perhaps most importantly, the rest of the world would be lagging the US recovery. Yields treaded water for much of Q2, but in July the yield curve started flattening such that US long bond yields are over 50 basis points below their March peaks of 2.45%; Canadian yields peaked in May and the 30-year yield is now about 40 bps below its peak of 2.19%. Although Canadian yields have generally tracked US yields, the 5-30’s Government of Canada curve is about 30 bps flatter than the US Treasury curve.”

Read More→
Q2 2021

 

 

Lorica Focused Fixed Income

“In June, bond investors decided to ignore the data, listen to the Fed and retreat from the inflation trade, buying long bonds and flattening the yield curve in the process. Through the first quarter of 2021, the themes dominating the US bond market were the strength of the economic recovery and elevated inflation, tactical short positions and asset mix shifts, all prompting the sale of bonds and steepening of yield curves. However, the recovery and inflation were and still are difficult to gauge as the pandemic has caused so many imbalances. The data has been volatile and extrapolating short term trends is fraught with difficulty.”

Read More→
June 2021 Commentary

 

Lorica Focused Corporate Bond

“Domestic investment grade credit spreads tightened in Q2 as lower volatility and investor appetite for risk assets over-shadowed lingering concerns over the durability of the economic recovery and corporate earnings. For the quarter, credit spreads narrowed by an average of 2 basis points and traded within a 5-bps range. Low volatility generally aided lower-rated (BBB-) higher yielding issuers whereas performance for other rating classes was more industry and issuer-specific.”

Read More →
June 2021 Commentary

  

Lorica Short Term Bond

“In June, bond investors decided to ignore the data, listen to the Fed and retreat from the inflation trade, buying long bonds and flattening the yield curve in the process. Through the first quarter of 2021, the themes dominating the US bond market were the strength of the economic recovery and elevated inflation, tactical short positions and asset mix shifts, all prompting the sale of bonds and steepening of yield curves. However, the recovery and inflation were and still are difficult to gauge as the pandemic has caused so many imbalances. The data has been volatile and extrapolating short term trends is fraught with difficulty.”

Read More →
June 2021 Commentary

WHAT WE THINK…
▸2021
▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014
▸2013
▸2012
▸2011
Q4
Q3
Q2
FOCUSED FIXED INCOME
▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014
▸2013
▸2012
▸2011
FOCUSED CORPORATE BOND
▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014
▸2013
▸2012
▸2011

SHORT TERM

▸2020
▸2019
▸2018
▸2017
▸2016
▸2015
▸2014