April 21, 2020—Financial markets remain in turmoil, but the focus has shifted from the equity market to the oil market. This week, oil prices fell into negative territory, a phenomenon that would seem to make about as much intuitive sense as negative interest rates. Here we discuss what is happening and offer some perspective on the path forward for energy prices.What happened?On Monday, April 20, the May contract for West Texas Intermediate crude, the U.S.
April 15, 2020—The COVID-19 epidemic and ensuing mitigation measures are unprecedented and will produce jarring impacts on the U.S. and world economies. The stay-at-home measures employed in the U.S. and elsewhere include the forced closure of vast swaths of the economy on both the goods and services sides. The first and most dramatic signs of the damage have been in new claims for unemployment insurance, which show 16.
April 2, 2020—In our 2019 Capital Markets Forecast we highlighted myriad risks posed by the increasing amount and deteriorating quality of BBB-rated debt, which sits in the lowest tier of the investment-grade corporate bond market and just one notch above high yield. A decade of low interest rates, thanks to an accommodative Federal Reserve, incentivized companies to increase their level of borrowing, helping the BBB universe grow by more than 300% since 2009.