Market Commentaries
Throwing the Baby Out with the Bath Water?
July 2017As of this writing, the State of Illinois began its fiscal year (July 1) without a budget for an unprecedented third year in a row. Sunday evening the Illinois House of Representatives approved a $36 billion spending plan that increases personal income taxes to 4.95% from the current 3.75% level and the corporate levy to 7% from 5.25%. If the Senate, which approved a tax hike last month, concurs on the House bill it will be presented to the governor for consideration. He has stated he will veto both the House and Senate spending bills as currently written.
The Cost of Waiting for the “Right Hand” of Cards
May 2017The post-crisis monetary policy reaction pushed interest rate markets into unchartered waters of zero interest rate policy (ZIRP). We have all become somewhat deadened to this reality over the last handful of years as monetary policy has led to heightened market valuations, paired with one of the longest periods of economic expansion (93 months) in our economic history.
Market Review – Spring 2017
April 2017The post-election bond market volatility that occurred during the fourth quarter of 2016 continued into the first quarter of 2017. The 10-year AAA MMD index reached a low of 2.14% on January 18th and topped out at 2.49% on March 14th. The difference be …
Vexing Bond Market Questions
February 2017This chart demonstrates the volatility of the 10 year U. S. treasury bond since the beginning of 2016. This volatility causes anxiety for many and understandably leads to several questions: Will long term bond yields increase as the Federal Reserve Bank increases its overnight lending bank rate? Should one invest in bonds now or wait until rates rise further? What is a proper equity/bond asset allocation given this volatility? These are pertinent questions and are often posed to our Investment Specialists and Portfolio Managers during the course of a week
Market Review – Winter 2016
January 2017The election of Donald Trump surprised many and sent bond markets into a market frenzy. On the day before the election, the 10-year AAA rated average municipal yield was 1.73%. By the end of November, the yield jumped to 2.51%. This 78 basis points jum …
Year of the Rooster
January 2017By Jeffrey D. Irish We wish you a healthy, happy and prosperous 2017. We thank our many clients and friends for your continued confidence and belief in the Bernardi team, our processes and the way we approach investing in today’s volatile bond market. …
Municipal Pension Liabilities: Between a Rock and a Hard Place?
October 2016By Matthew P. Bernardi Municipalities have done an excellent job since the financial crisis in stabilizing their finances and have pulled a number of levers to reduce fixed costs. Today’s low growth environment calls for prudent management and the aver …
Market Review – Fall 2016
October 2016Market Update: Fed fund futures priced in a low probability of a September rate hike and the Fed did not disappoint by holding rates steady. The municipal market saw yields drift higher for the quarter as the Fed fund futures market show an increased p …
Market Review – Summer 2016
July 2016Market Update: Municipal bond yields decreased during the second quarter with AAA 5-year, 10-year, and 20-year yields falling 21, 37, and 49 basis points, respectively. Yields dropped dramatically after the United Kingdom (U.K.) voted to leave the Euro …
Market Update: June 30, 2016
June 2016By Thomas P. Bernardi We have provided some color about the current state of the bond market below: Worldwide interest rates have declined in the aftermath of the Brexit vote. The bond market rally continued through Monday, June 27th, with the taxable …
Our Three Pillars and the Latest Census Report
June 2016By Matthew P. Bernardi Our descriptive Three Pillars is an over generalization of our approach to municipal credit analysis. When we look under the hood of each bond, numerous variables come into play, including: State statutes, taxing capacities and l …
Fiduciary vs. Suitability and Our Portfolio Management Process
May 2016By Michelle Bernardi Landis I have spoken to a number of clients recently regarding the impact the Department of Labor’s (DOL) Fiduciary Standard ruling will have on their qualified plans. Even though the DOL ruling only affects retirement accounts, i …
Market Review – Spring 2016
April 2016Market Update: Municipal bond yields decreased during the first quarter with AAA 5- year, 10-year, and 20-year yields falling 15, 18, and 8 basis points, respectively. In March, the Federal Reserve announced that their pace of interest rate increases w …
Selling Your Bonds?
April 2016Are you thinking of selling some of your bonds? Selling bonds is an infrequent exercise for most retail investors and even many institutional clients. A vexing question for many is, “How do I know I am getting a fair market price for my bonds?” At many …
Ides Of March 2016 – Et Tu, Puerto Rico?
March 2016By Ronald P. Bernardi IDES OF MARCH 2016 – ET TU, PUERTO RICO? The Ides of March, the 15th of the month, represents the monthly midpoint of the Roman calendar. Julius Caesar was assassinated on the Ides in 44 BC by his friend Marcus Brutus and others …