In the fixed income world investors often talk about “the spread” as one possible driver of returns. But what is “the spread” and why does it exist? Generally speaking, the spread in interest rates which is also called “credit spread” refers to the difference between two interest rates, often between a benchmark rate (normally the interest rate of government bonds) and a specific interest rate on another type of bond (such as corporate bonds). For example, if a 10-year government bond has a 3% interest rate and a corporate bond of similar duration has a 5% interest rate, the spread

U.S. equity investors in the six year period between 1973 and 1978 would have made no nominal return on their investment, with inflation averaging 7.7%. Hence it is understandable that investors remain so concerned about the potential impact of a higher rate of rising prices. This is why all eyes are currently on the bond market and whether it is signalling a return to the 1970s, and whether firms will be able to maintain and grow profit margins. No need to panic The U.S. February 2021 inflation data showed an increase of 0.4%, resulting in an annualized consumer price index

Last month, U.S. Secretary of State Mike Pompeo spoke of the need for a new grouping of democracies to face what he argued was the increasing threat to freedom from China. While Pompeo didn’t give much away on how this might be approached, he did recognize that it raised a set of complex new challenges, given the interconnectivity between China and the U.S. Since his speech, the Nasdaq and Shanghai stock indexes have risen by 9% and 2% respectively. Investors, it seems, are unconcerned about the possibility of an escalation of events between the two superpowers creating an immediate halt

Admittedly, the title to this article may be a pun too far. However, in this post, we’ll show you where you could have found signs of potential distress within rental car company Hertz Global Holdings Inc. (HTZ.N), well before it filed for Chapter 11 bankruptcy protection on May 26. The analytics presented in this report come from Refinitiv’s suite of StarMine quant models. As shown in Exhibit 1, the Eikon widget that sorts StarMine models into bullish and bearish categories show many bearish indicators for Hertz and not a single bullish one. StarMine models fall into two categories – alpha

When 178-year-old British travel company Thomas Cook failed on Sept. 23, 2019, thousands of travelers were covered by Air Travel Organizers’ Licensing (ATOL), an insurance plan that covered people who purchased package holidays and flights. In addition, the British Civil Aviation Authority executed the largest peacetime repatriation in the nation’s history, bringing back home 150,000 Britons. Investors, of course, were not so fortunate. The safe arrival of their capital is not protected. However, there were indicators before the company’s collapse that rough weather was ahead. StarMine by Refinitiv offers a range of alpha-generating stock selection models in addition to a

“Lower for longer” is the new mantra. Certainly in the U.K. and Europe and perhaps a little less so in the U.S., the anchoring of low end rates continues to drive yield-thirsty investors to distraction. Whispers about a bond bubble have been around for several years now, but with asset buying by central banks becoming an established policy measure, utterances are becoming louder and are coming not just from investors. There has been several high-profile investment executives warning of bond overheating. Large inflows have forced the hands of many bond fund managers to seek ways to fully invest them. The