Putting Excess Cash to Work

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Putting Excess Cash to Work

As rates have increased in 2022, short term fixed income yields are the highest they’ve been in nearly 15 years. The Federal Reserve has been aggressively tightening monetary policy to bring down inflation by increasing the Federal Funds Rate. The actions of the Fed and other central banks around the world have resulted in significant volatility in equities and in interest rates.

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April Private Client Letter

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April Private Client Letter

The capital markets have been operating in a nervous phase of uncertainty and volatility from the beginning of the year. Investors have been unable to gain any meaningful traction as nearly every traditional asset class has been under pressure.

We are seeing a large-scale conflict between favorable economic data and decent corporate earnings, with a decades-high rate of inflation and the appalling war in Ukraine. Economic fundamentals and growing corporate profits would normally be net positives for the markets. However, high inflation is quickly driving tighter monetary policy and higher interest rates. This, along with ongoing geopolitical distress, are net negatives for the markets.

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A Guide to MLPs

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Investors seeking dividend yield have conventionally employed traditional fixed income investments for this portion of their portfolio. In today’s low interest rate environment, filling this part of the portfolio has become more and more difficult. Given the inverse relationship that bonds have with interest rates, a rising rate environment is suboptimal for conventional fixed income. This has lead investors to seek out other types of arrangements to generate cash flow.

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