How CFOs should navigate the current environment
Whether you are managing a large corporate balance sheet or your retirement portfolio, all CEOs, CFOs, investors or financial controllers benefit from understanding the impact of the macro-economic environment on their business or investment strategy. Today we look at US and Jamaican monetary policy and their implications for our investment strategy: Central Bank Policy – Interest […]
Financial Markets Performance: Looking Back while Navigating Ahead
The year 2024 was a fascinating one for global financial markets, marked by shifting monetary policies, evolving geopolitical dynamics, and a continued focus on sustainability. While the markets faced periods of volatility, certain sectors demonstrated resilience, offering both challenges and opportunities for investors. In this article we’ll review the performance of financial markets in 2024, […]
Trump 2.0 – Implications for markets
The implications of a second Trump presidency could significantly shape the U.S. economy, the global economy, financial markets, and financial assets. Investors and policymakers are bracing for potential shifts in fiscal and monetary policy, as well as broader economic trends that are likely to unfold over the coming years. U.S. Economic Outlook A Republican “red […]
How to replace your NROCC income
On November 10th, 2024, investors will receive the balance of their principal investments in the NROCC 9.375% 2024 bond. Today we will: Refresh our memory on the details of the NROCC bond Identify potential alternatives List the questions investors should ask their advisors when evaluating alternatives A Refresher on what you own The National Road […]
Changing Gears: No bonds, now what?
When the interest rate environment changes, investors face unique challenges, especially when it comes to replacing a maturing bond. For instance, many local investors hold the NROCC (National Road Operation and Construction Company Ltd.) 9.375% bond maturing in November. They received 50% of the principal in 2023, when yields and coupons were at record highs, […]
Finding a Home for Your Funds
We are now officially in the last quarter of the year, and some would say time flies when you are having fun. Although, many fixed income investors would probably beg to differ and say the last two years were not fun due to market volatility. How quickly we forget the opportunities the volatility presented! The […]
Mastering the Market Maze
The era of elevated bond yields and attractive fixed-income returns is receding, ushering in a new phase where the dynamics of income generation and capital preservation require a sophisticated approach. The inverse relationship between bond prices and yields has been a cornerstone of fixed income investing. As interest rates decline, bond prices rise, leading to […]
Are you prepared?
In the ever-changing landscape of the financial market, investors are often faced with the challenge of navigating through the complexities of various investment options. In last week’s article, Eugene mentioned the critical concept of bond duration, and noted that investors should pay keen attention to this when looking to build a solid portfolio. With the […]
Fed Rate Cuts Are Imminent: Implications for Bond Investors
As the Federal Reserve moves closer to initiating a rate-cutting cycle, bond investors are reassessing their strategies. The Fed’s decision to hold rates steady in July was widely expected, but what caught the market’s attention was the growing possibility of rate cuts in the coming months. The July employment report, which showed a surprising rise […]
One one “CoCo” full basket
Adding bonds consistently to your portfolio is a way to prepare yourself for retirement as bonds provide a steady source of income. A type of bond that you should consider adding to your bond portfolio is a Contingent Convertible Bond (CoCo) because they typically offer higher coupons (income) than other bonds. CoCos are complex financial […]
Where and how to lock in your returns
Pros and Cons of higher interest rates: The past two years of high interest rates have had negative implications for many asset classes and inversely, presented many buying opportunities for investors. Locally, higher interest rates (and the tight Jamaican dollar liquidity conditions) translated to lower local equity valuations (and thus less “upside” potential). Higher interest rates […]
Weathering Market Turbulence with Bonds
Just as hurricane season acts as a reminder of the need to protect our homes from turbulent weather, each year investors face a familiar challenge: how to protect their portfolios amidst potential financial storms. Much like preparing for severe weather, smart investing involves fortifying your financial strategy to withstand market volatility. Bonds, which can be compared to […]
Fewer rate cuts, more opportunities
In last week’s article, Eugene spoke about the Federal Reserve’s recent decision to maintain its benchmark interest rate and reduce interest rate cut forecasts for this year. But what does this mean for investors and global bond holders? For the remainder of 2024, the global bond market is set for a potential shift as the […]
The Path to Policy Normalization in the U.S. Remains Uncertain
In the wake of the Federal Reserve’s recent decision to maintain its benchmark interest rate at a two-decade high of 5.25% to 5.5% and reduce rate cut forecasts for this year, the path to policy normalization in the United States remains fraught with uncertainty. The decision, reached by Fed officials, signals a cautious approach to […]
Invest in local currency and earn foreign currency
Invest in local currency and earn foreign currency? What sorcery is this?! Investing in assets that pay interest in a stronger currency while the principal investment is in a weaker or more volatile currency can be an effective investment strategy to hedge against devaluation risks- no sorcery or magic involved. This approach not only helps […]
Seize the Moment: Capitalize on Higher Interest Rates Now
The “Higher interest rates for longer” phenomenon in the US has created a brief window of opportunity for investors to lock in attractive yields that will outlast the current cycle. Investors can enjoy higher returns even when interest rates decline. On Friday May 31st, 2024, the 2-year US Treasury yielded 4.875% and the 10-year US […]
Be Protected: Know Your Covenants
In the world of bond investing, risk mitigation is critical, hence bond covenants serve as important safeguards of investor interests. These contractual agreements outline the terms and conditions of bond issuances, providing a framework to protect bondholders from potential risks and uncertainties. Among the myriad of bond covenants, change of control restrictions, ratings restrictions, and […]
Are Women Better Investors than Men?
While it’s important to note that individual investment strategies vary widely and should not be generalized based on gender, there have been some observed trends and differences in the way men and women approach investing. These differences are often influenced by a combination of social, psychological, and economic factors. The realm of finance and investment […]
Positioning your portfolio for changing interest rates
Throughout 2023 fixed income investors who were brave and had excess liquidity were able to take advantage of opportunities that arose in the bond market. Investors were able to add instruments that were investment grade at steep discounts. While some investors clutched their pearls, the brave stayed the course even as their portfolio value perhaps […]