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Manager insights: Bulls, bears, and bond markets

johnNjohnN
edited April 2020 in Other Investing
https://www.putnam.com/dcio/content/perspectives/7540-manager-insights-bulls-bears-and-bond-markets-2

/Manager insights: Bulls, bears, and bond markets

Commenting on the extreme swings in the market over the past few weeks, several of Putnam’s senior fixed income managers shared their insights on the bond markets, liquidity, and the Federal Reserve’s actions as of March 24.

Extreme dislocations in money markets, corporate bonds, and securitized debt, as spreads widen and flows near a record pace, will eventually lead to potential opportunities for investors as they look to redeploy cash.
The Fed has acted swiftly and often by announcing numerous lending facilities to ease a liquidity crunch in the financial markets amid the coronavirus (COVID-19) pandemic.
High-yield bonds are pricing in the probability of higher default rates, particularly in the energy sector as oil prices have plummeted./


Article discuss current bonds environments, Feds' actions, risks assessments, and certain directions that their managers implement that may have favorable outcomes with future investments.


Comments

  • catch22catch22

    From Emily Shanks in the article:
    "However, the market is pricing in the probability that more than 10% of single-A-rated corporate debt would be downgraded to triple-B, and more than 10% of triple-B corporate credit would be downgraded to double-B or to high-yield status."
    This aspect of the bond market, as well as other areas discussed in the article have been chatted about here; too the extent that BBB ratings (pre-melt) for corps. were already considered "good" junk status, at best.

    Be safe.
    Regards,
    Catch

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