EP Wealth Advisors’ Post

Rising inflation and cost-of-living pressures have reduced the value of fixed income investments, but made private credit more attractive with its direct link to interest rates. https://ow.ly/Zz3r50SWpP3 CAPSPACE Tim Keith #SMSF #financialplanning #smstrusteenews #smsfinvestors

Investors should monitor the growing dominance of U.S. fiscal policy on markets in the second half of 2024 and beyond, and consider opportunities in emerging market debt, U.S. equities, loans and real estate.

The never ending supply of US Treasuries will test liquidity and the market's ability to asorb all this debt without disruptions. Annual issuance of U.S. Treasurys has exploded, nearly doubling since the pandemic began. The government sold a record $23 trillion worth in 2023.  The Treasury market has grown more than 60% to $27 trillion since the end of 2019. It is roughly sixfold larger than before the 2008-09 financial crisis. The Congressional Budget Office anticipates government spending that continues to climb in the coming years, with an aging population raising the cost of programs such as Social Security and Medicare. Rising interest costs could also boost issuance. Who are the buyers? Banks have pared their buying of Treasurys for years, constrained by postcrisis regulations that are poised to get even more restrictive. Hedge funds, money-market funds and foreign investors are now America’s primary financiers. While foreign investors have steadily bought Treasurys, a strong dollar and growing supply of high-quality bonds elsewhere could slow purchases. Foreign holdings have declined below one-quarter of outstanding debt, after sitting at more than one-third in 2015. #treasuries #bonds #fixedincome #banks #moneymarketfunds #moneymarkets #assetmanagers #hedgefunds #regulators #liquidity #fixedincome #sec #treasury #debt #repo #sofr #securitieslending

👉 "As Western governments shy away from debt reduction and structural reform, investors must reassess their view of ‘safe’ assets." . . . "All of this may call for a wider rethinking of the nature of risk in financial markets. Economists and actuaries have long referred to #sovereign #bonds as “safe” assets that deliver a risk-free return. Many also claim that bonds provide insurance against the volatility of “risky” equities." . . . "All of which suggests the Federal Reserve will need to continue backstopping the Treasury market and the banking system. With the US and many others responding to debt-dependent growth by applying short-term fiscal and monetary remedies rather than structural reforms, the financial system will continue to act as a gigantic sticking plaster to address endemic imbalances and periodic crises." Credit: John Plender #GlobalPublicDebt #DebtReduction #StructuralReform #SafeAsset #RiskManagement #PerspectiveMatters

Some thoughtful information for investors and US citizens concerned about government debt trends. #investing #debt #treasuries #bonds #interestrates #economy #fed #treasury #wsj When the government doesn’t take in enough from taxes to fund its spending, the Treasury Department issues bonds to fill the gap. The agency raised a net $2.4 trillion last year to finance the deficit, taking into account what it had to sell to repay holders of maturing debt. The Treasury market has grown more than 60% to $27 trillion since the end of 2019. It is roughly sixfold larger than before the 2008-09 financial crisis. One reason demand for Treasurys remains solid: fewer alternatives. Many companies issued long-term bonds when the pandemic sent rates near zero, then slowed borrowing when the Fed started raising them. The market for mortgage-backed securities is nearly frozen, with few Americans moving in the most expensive housing market in decades. https://lnkd.in/gV3n6CB2

Let's be honest, it has been nice to sit back, do nothing and earn 5% on our cash savings over the past 12 - 18 months. The bad news is that party may be ending soon. When it does, do you have a plan on what you will do with your cash? Should you take action now before interest rates drop? Does your investment plan match your goals and time horizon? #acmwealth #investments #wealthmanagement #financialplanning

Always remain open to views that challenge your assumptions! In this month’s #asset allocation report, while noting that the weight of information still points to benign conditions, some analysts are citing data that could portend a slowdown in the US. Though we might remain positive on the US #economic outlook, we're looking at US debt due to the vast sums the country has borrowed – numbers that could mushroom under a Trump administration. Watch our June Monthly Minute(s) #investment update here. The full article is available to read on our website: https://lnkd.in/ef4dNZCa

Why have defaults for high yields fallen over 2023 and 2024? Troubled high yield issuers have accessed capital from the private debt market, so they make up a smaller part of the high yield market. Find out more on why we expect annual default rates to stay within a range of 2-3% for Europe and the US: https://bit.ly/3L8G6zH Capital at risk. For professional investors only.

With the election season in full swing, it’s hard not to think of famous slogans from the past. A memorable one from my youth is James Carvillle’s “It’s the economy, stupid,” slogan which helped Bill Clinton win in 1992. For credit investors today, “economy” could be swapped with “yield,” given the current attractive return prospects that we see at these starting levels of yields. However, as highlighted in this quarter’s outlook, caution is essential. Credit spreads remain tight at the index level particularly in the US and in EMD. Emerging cracks could widen in the coming quarters, leading to more opportunities in stressed and distressed investments. Read more in the link below. #investmentgrade #highyield #emd #convertiblebonds #srt #opportunstic #distressed

💡 The Federal Reserve just lowered interest rates for the first time in over four years. What does this mean for you? 💡 Whether it's reassessing your investment strategies or considering opportunities, now is the time to adapt. From shifting your exposure to exploring corporate bonds, there are key moves to make during this rate cut cycle. 🏡 Real estate, small caps, and corporate bonds could see potential gains. #FederalReserve #InvestmentStrategies #Finance #MikeMittleman