WHAT WE THINK…

 

WHAT WE THINK

“We look forward to 2021. It is hard to imagine more uncertainty than what we experienced in 2020, but from a capital markets perspective 2009 was worse. Our lives were plenty upended in 2020, but policy-makers had the benefits of a dress rehearsal during the credit crisis which enabled them to respond quickly and effectively to stabilize markets and the economy – as much as possible. With the deployment of the vaccine in progress, the US election out of the way, Brexit resolved, some key uncertainties have disappeared, although many still remain. There are still big unknowns related to the virus: mutation, vaccine production, distribution, acceptance, efficacy, number and severity of subsequent waves, etc. The global economy is still vulnerable and as yet, no-one has addressed how the mountains of corporate and government debt will be dealt with. And geopolitical risks will not easily dissipate, given the growing assertiveness of China, the boldness of Russia, the desperation of Iran, and a new administration in Washington.”

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Q4 2020

 

 

Lorica Focused Fixed Income

“Canadian bonds returned a healthy 8.68% in 2020 (FTSE Russell Canada Universe Bond Index), considerably better than Canadian equities which returned 5.60% (S&P TSX). However, equities still dominated the headlines because of the lofty returns in the US: 18.40% (S&P 500) due to technology stocks benefitting from the pandemic. Although Canadian bond returns were high for the year, it was a case of halves: 7.53% in H1 versus 1.07% in H2. The prevailing theme in the first half was the decline of government yields, led by lower policy rates and quantitative easing. Corporate yield spreads widened dramatically in March, but retraced 2/3’s of the move by mid-year, retracing the remainder by year-end.”

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December 2020 Commentary

 

Lorica Focused Corporate Bond

“The surge in global COVID cases and equity market volatility in the runup to the US election led to bear steepening of credit curves. Following the election, sentiment shifted as political risk diminished and positive vaccine news intensified. Even the US Treasury’s surprise decision to retire the Fed’s corporate bond purchase program (Secondary Market Corporate Credit Facility or SMCCF) at year-end resulted in only a brief pause to spread narrowing. Overall, credit spreads tightened by an average of 26 basis point during Q4, with lower-rated, higher-beta issues outperformi.”

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December 2020 Commentary

  

Lorica Short Term Bond

“Canadian short term bonds returned a healthy 5.29% in 2020 versus 8.68% for universe bonds (FTSE Russell Canada Universe Bond Index), pretty good compared to Canadian equities which returned 5.60% (S&P TSX). However, equities still dominated the headlines because of the lofty returns in the US: 18.40% (S&P 500) due to technology stocks benefitting from the pandemic. Although Canadian short term bond returns were high for the year, it was a case of halves: 4.04% in H1 versus 1.20% in H2. The prevailing theme in the first half was the decline of government yields, led by lower policy rates and quantitative easing. Corporate yield spreads widened dramatically in March, but retraced 2/3’s of the move by mid-year, retracing the remainder by year-end.”

Read More →
December 2020 Commentary

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

SHORT TERM

WHAT WE THINK…

 

WHAT WE THINK

“We look forward to 2021. It is hard to imagine more uncertainty than what we experienced in 2020, but from a capital markets perspective 2009 was worse. Our lives were plenty upended in 2020, but policy-makers had the benefits of a dress rehearsal during the credit crisis which enabled them to respond quickly and effectively to stabilize markets and the economy – as much as possible. With the deployment of the vaccine in progress, the US election out of the way, Brexit resolved, some key uncertainties have disappeared, although many still remain. There are still big unknowns related to the virus: mutation, vaccine production, distribution, acceptance, efficacy, number and severity of subsequent waves, etc. The global economy is still vulnerable and as yet, no-one has addressed how the mountains of corporate and government debt will be dealt with. And geopolitical risks will not easily dissipate, given the growing assertiveness of China, the boldness of Russia, the desperation of Iran, and a new administration in Washington.”

Read More→
Q4 2020

 

 

Lorica Focused Fixed Income

“Canadian bonds returned a healthy 8.68% in 2020 (FTSE Russell Canada Universe Bond Index), considerably better than Canadian equities which returned 5.60% (S&P TSX). However, equities still dominated the headlines because of the lofty returns in the US: 18.40% (S&P 500) due to technology stocks benefitting from the pandemic. Although Canadian bond returns were high for the year, it was a case of halves: 7.53% in H1 versus 1.07% in H2. The prevailing theme in the first half was the decline of government yields, led by lower policy rates and quantitative easing. Corporate yield spreads widened dramatically in March, but retraced 2/3’s of the move by mid-year, retracing the remainder by year-end.”

Read More→
December 2020 Commentary

 

Lorica Focused Corporate Bond

“The surge in global COVID cases and equity market volatility in the runup to the US election led to bear steepening of credit curves. Following the election, sentiment shifted as political risk diminished and positive vaccine news intensified. Even the US Treasury’s surprise decision to retire the Fed’s corporate bond purchase program (Secondary Market Corporate Credit Facility or SMCCF) at year-end resulted in only a brief pause to spread narrowing. Overall, credit spreads tightened by an average of 26 basis point during Q4, with lower-rated, higher-beta issues outperforming.”

Read More →
December 2020 Commentary

  

Lorica Short Term Bond

“Canadian short term bonds returned a healthy 5.29% in 2020 versus 8.68% for universe bonds (FTSE Russell Canada Universe Bond Index), pretty good compared to Canadian equities which returned 5.60% (S&P TSX). However, equities still dominated the headlines because of the lofty returns in the US: 18.40% (S&P 500) due to technology stocks benefitting from the pandemic. Although Canadian short term bond returns were high for the year, it was a case of halves: 4.04% in H1 versus 1.20% in H2. The prevailing theme in the first half was the decline of government yields, led by lower policy rates and quantitative easing. Corporate yield spreads widened dramatically in March, but retraced 2/3’s of the move by mid-year, retracing the remainder by year-end.”

Read More →
December 2020 Commentary

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

SHORT TERM