Natixis Canada Blog

Month: September 2015


September 2015 – Corporate Bond Update

Baker Gilmore Photo

Uncertainty over the prospect of rate increases by the US Federal Reserve and reduced secondary market trading by banks and investment dealers has led to a jump in bond market volatility.

With credit spreads on corporate bonds rising in recent months, liquidity premiums on high quality corporate bonds remain wide, providing an excellent opportunity for patient, longer term investors to achieve higher yields in their bond portfolio without taking on increased credit or default risks.

 

 

 

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Bond in August: Safe Havens also Fluctuated Amidst Chinese Concerns

Jeff Herold
Jeff Herold, J. Zechner Associates, Lead Fixed Income Manager

Concerns about Chinese economic growth slowing caused remarkable volatility in equities, commodities, and exchange rates during August. As a result, demand for the safe haven asset class, bonds, also fluctuated considerably in the month. In the end, though, bond investors focused on the strength of the U.S. economy and the possibility that the U.S. Federal Reserve would start raising interest rates in September; bond prices declined and yields rose from month earlier levels. The FTSE TMX Canada Universe Bond index declined 1.00% in the period.

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Preferred Shares in August: Market Bottom Reached?

Jeff Herold
Jeff Herold, J. Zechner Associates, Lead Fixed Income Manager

Preferred shares suffered their third consecutive month of significant price declines, returning -3.82% in August. The market action last month strongly resembled that of the summer of 2013, when the Taper Tantrum caused preferred shares to selloff and then recover sharply in the autumn of that year. With price declines occurring on low volumes and selling indiscriminately spreading from low reset spread issues to all types of preferred shares, the decline of the market during August appeared to be capitulation by some retail investors giving up on the asset class. Like global equity markets, the preferred share market was heavily impacted by the Chinese equity induced volatility that culminated on August 24th. Following that day, however, the preferred share market began recovering as bargain hunters recognized its oversold valuation.

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Monthly Review and Outlook – August 2015

Donald Nesbitt & Mikhail Alkhazov – Ziegler Capital Management

Ziegler Photos
After flying along smoothly for the better part of the past year, U.S. equity markets hit some turbulence in late August, with the S&P 500 Index falling over 11.0%, before finding a bottom and recovering to show a 6.0% loss for the month. The correction appears to have been triggered over concerns of slowing global economic growth, fueled by a free-fall in Chinese equities and aggravated by the absence of any positive news in the dog days of summer.

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