Saturday, May 30, 2009

Risk


YTD, leveraged loans (+26.0%), high yield bonds (+24.2%), convertibles (+14.7%), and high grade corporate bonds (+8.0%, rate hedged) continue to outpace most other assets (from some Citigroup research that someone pointed out to me.)
We are five months into the year and it certainly looks like the appetite for risk has returned to this market.


Of late, the dollar has been moving lower and U.S. rates have been moving higher. From where I sit it looks like consensus is that the market is frowning on U.S. economic policy including the size of the balance sheet and the rate at which money is being printed.


Another possibility is that the global market is pricing in the end of the financial crisis and recession, and no longer needs the U.S. safe haven cash and bonds. I dunno.

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