Institutional Investor (September 3)
“After years of low interest rates, which masked managers’ mistakes in underwriting and risk-taking, the current economic environment is exposing a huge gap in origination quality and covenant discipline among managers. But allocators aren’t panicked: More than half see the current challenges as cyclical rather than structural, with 62 percent expecting private credit to emerge stronger. In addition, 75.5 percent of allocators agree that periods of market stress are the best times to reassess managers and renegotiate terms for the future.”
Tags: Allocators, Covenant discipline, Cyclical, Economic environment, Exposing, Gap, Interest rates, Managers, Market stress, Origination quality, Private credit, Renegotiate, Risk-taking, Structural, Underwriting
The Economist (August 29)
“The background music of Donald Trump’s second term has been the sound of norms breaking. On economic policy alone, the president has used tariffs to usurp Congress’s taxing powers and launched attack after attack on the independence of the Federal Reserve, which he accuses of keeping interest rates too high.” While it may be “tempting to tune the noise out,” the Treasury’s recent intervention in bond markets “deserves to echo far and wide.” And “so long as government debt stays high,” more of these unconventional Treasury follies will probably ensue, but America will ultimately come to “regret Scott Bessent’s bond-market misadventures.”
Tags: Attack, Background, Bessent, Bond markets, Congress, Debt, Economic policy, Federal Reserve, Government, Independence, Interest rates, Intervention, Misadventures, Noise, Norms breaking, Regret, Tariffs, Taxing powers, Treasury, Trump, Unconventional, Usurp
New York Times (August 27)
“Propping up the yen. Buying back U.S. debt. Americans might wonder: What is the Treasury Department doing? Over the past month, it has made some unusual moves to tamp down an alarming surge in interest rates. The global history of maneuvers like these suggests that they rarely work on their own — and can often be worse than doing nothing.”
Tags: Alarming, Buying, History, Interest rates, Maneuvers, Propping up, Surge, Tamp down, Treasury, U.S. debt, Unusual, Worse, Yen
Motley Fool (August 2)
“While earnings season has been a mixed bag, with investors punishing companies spending exorbitantly on their artificial intelligence data center build-outs, it was the Federal Open Market Committee’s (FOMC) decision to leave interest rates unchanged that roiled the iconic Dow Jones Industrial Average, benchmark S&P 500, and technology-powered Nasdaq Composite. The Dow’s greater-than 1,100-point loss on July 29 was its worst single-day performance in over a year.”
Tags: AI, Companies, Dow, Earnings season, FOMC, Interest rates, Investors, Mixed bag, Nasdaq Composite, Punishing, Roiled, S&P 500, Spending. Data center build-outs
Bloomberg (July 6)
“Donald Trump’s war against Iran may be over, but the repercussions for global monetary policy are here to stay.” In particular, “the path for central bank interest rates around the world has now shifted higher for years to come.” Forecasts for borrowing costs calculated by Bloomberg Economics (BE) “show trajectories elevated by as much as half a percentage point or more through 2028 compared with those envisaged before the war. That’s both on BE’s global gauge for rates, and its measure for advanced economies.”
Tags: 2028, Bloomberg Economics, Borrowing costs, Central bank, Elevated, Forecasts, Global, Higher, Interest rates, Iran, Monetary policy, Repercussions, Trump, War
Barron’s (May 27)
“Stocks are near their all-time highs.” Moreover, “investors are nervous about the numerous risks that could hit stocks and the economy. High oil prices and persistent inflation fears. The possibility that this will push the Federal Reserve to raise interest rates. Worries about artificial-intelligence disrupting software and other sectors.” Nevertheless, Goldman Sachs believes equities “are still good investments” because “rapidly rising earnings could keep pushing up stock prices” and, rather than dumping equities, investors can manage risk in other ways.
Tags: AI, All-time highs, Earnings, Economy, Equities, Fears, Fed, Goldman Sachs, Inflation, Interest rates, Investors, Nervous, Numerous, Oil prices, Stock prices, Stocks
The Times (May 27)
“Corporate leaders who think decades ahead in business become incredibly short-sighted in advocacy, financing ideas that become roadblocks to innovation and growth.” Big Tech is currently finding out about the phenomena that Milton Friedman dubbed “the suicidal impulse of the business community.” For years, Big Tech “helped fund climate activism,” but they now face “backlash as AI data centres drive demand for energy and infrastructure growth.”
Tags: AI, All-time highs, Earnings, Economy, Equities, Fears, Fed, Goldman Sachs, Inflation, Interest rates, Investors, Nervous, Numerous, Oil prices, Risk, Stock prices, Stocks
Financial Times (May 1)
“The European Central Bank and the Bank of England have warned they may need to raise interest rates in the coming months, as central banks grapple with the energy shock triggered by the war in the Middle East. The two central banks on Thursday followed the Federal Reserve in holding interest rates at their current levels, but both indicated future rate rises could be necessary if soaring energy costs spill over into persistently high inflation.”
Tags: BOE, Central banks, Costs, ECB, Energy shock, Fed, Grapple, Interest rates, Middle East, War, Warned
Wall Street Journal (April 8)
“Landlords and their lenders held on to their office towers for years, hoping for a turnaround after Covid. Now, they are accepting enormous losses. Owners and creditors are capitulating to the reality that more employees are splitting their work time between home and office. They are also resigned to stubbornly higher interest rates, which lower property values and make it harder for buyers to borrow.”
Tags: Buyers, Capitulating. Reality, Covid, Creditors, Employees, Home, Interest rates, Landlords, Lenders, Losses. Owners, Office towers, Property values, Turnaround
Bloomberg (February 19)
Just released minutes from the January 27-28 FOMC meeting reveal Federal Reserve officials are “surprisingly wary of cutting interest rates…, with several even suggesting the central bank may need to raise rates if inflation remains stubbornly high.” The minutes make “clear the Fed is shifting further away from agreeing on another cut.”
Tags: Central bank, Cut, Federal Reserve, FOMC, Inflation, Interest rates, January 27-28, Minutes, Officials, Raise, Released
