Insights

The devastating events that continue to unfold in the conflict between Ukraine and Russia have led to steep price declines in both countries’ financial markets.

• Economic recovery likely undeterred: Rising energy prices add risk to Europe’s recovery but are unlikely to derail the global economic recovery.
• Expect further equity volatility: We see the strongest impacts in commodities, energy and financials, but focus should shift quickly to interest rates and supply-chain resolution.
• Seeing value amid spread widening: We believe the impact of Russia’s actions on fixed income markets has largely played out, and any further widening in credit spreads could present opportunities.

The market’s expectations for curve flattening may be excessive, as the timing of rate hikes and the aggressiveness of the Federal Reserve are still open to debate.

January 1, 2022 marked a significant milestone in the transition from LIBOR to alternative reference rates.

The fundamental and technical loan picture remained favorable in Q4-2021, supporting CLO performance with sustained improvement in structural/market value metrics.

Improved funded status is driving conversations around the inclusion of non-traditional fixed income assets in ALM modeling, including investment grade private placements, CMLs and CMOs.

We see scope for continued global equity gains as the impacts from Covid, policy stimulus and inflation diminish. The current balance of market factors keeps us overweight U.S. large cap stocks.

Matthew Toms, CFA, Chief Investment Officer of Fixed Income, shares our outlook for the markets for the first half of 2022. 

The market’s curve flattening expectations may be excessive, as the timing of the hikes and aggressiveness of the U.S. Federal Reserve are still open to debate.

Sean Banai, CFA, Head of Portfolio Management, shares our outlook on Global Growth for the first half of 2022.