FICC Focus

With US growth holding up and inflation still running above target, investors are weighing whether the Federal Reserve needs to tighten policy further or can afford to stay on hold. Drew Matus, chief market strategist at MetLife Investment Management, joins Bloomberg Intelligence chief US interest-rate strategist Ira Jersey to discuss this and more on this Macro Matters edition of the FICC Focus podcast. Matus argues that rate hikes would do little to address the forces currently supporting inflation while risking unnecessary damage to the broader economy, and explains why he expects the Fed to remain on hold. The two also discuss how the AI investment boom and household wealth effects are supporting US growth, why Matus sees AI as a potential source of job creation and productivity gains, and where those benefits could create opportunities across emerging markets and Japan. They also examine global fixed-income valuations, geopolitical and oil-market risks and why clearer rules governing the relationship between the Treasury and Fed — including the composition and size of the central bank’s balance sheet — could ultimately reduce uncertainty for markets.

The Macro Matters podcast is part of BI’s FICC Focus series.

Global credit markets have stayed relatively calm through war and peace, despite swings in the rates markets, making strategic insights essential. In this episode of the Credit Crunch podcast, Mahesh Bhimalingam, Bloomberg Intelligence’s global head of credit strategy, hosts our global team to discuss key research, data and views from around the world. Tim Tan and Jason Lee in Asia, Reto Bachmann from structured credit, Heema Patel in Europe and Alice Zhou in the US share their outlooks and the key themes shaping their regions. Access their research on the Bloomberg Terminal at BI STRTA, BI STRTE and BI STRTN.

To demonstrate how the modern bankruptcy system often feels prepackaged and inevitable, Brown Rudnick’s Robert Stark compares the current state of Chapter 11 to a trip to the local bureaucracy: “We could do everything that is being done now by setting up bankruptcy at a DMV, go cut your deal in the back room, bring your $60 check, stand in line, and get a rubber stamp by the DMV.” Stark and Houlihan Lokey’s Saul Burian join Bloomberg Intelligence analysts Negisa Balluku and Phil Brendel to explore the increasing friction in today’s bankruptcy courts, including the consequences of judge-led mediation, the rise of aggressive DIP financing features like roll-ups and post-reorg equity packages, and the debate over the true neutrality of “independent” directors. The podcast concludes with a look at the restructuring outlook and a discussion about the surprising return of “dumb frauds” catching major Wall Street institutions off guard. Cases mentioned include First Brands Group, Multi-Color Corp., Del Monte, J&J, BlockFi, 3M and American Tire.

With the Federal Reserve leaning toward a smaller balance sheet and several year-end funding pressures approaching, investors may need to pay closer attention to liquidity and the cost of financing leveraged positions. E.G. Fisher, chief investment officer at Mariner Investment Group, joins Bloomberg Intelligence chief US interest rate strategist Ira Jersey to discuss that and more on this Macro Matters edition of the FICC Focus podcast. Fisher explains why market liquidity remains strong but funding liquidity could become more challenging as bank reserves decline, the Treasury General Account grows and major balance-sheet reporting dates approach. The two discuss whether Treasury lending of TGA balances could ease repo pressures, how Chair Kevin Warsh’s preference for a smaller Fed balance sheet may affect funding markets and why recent Treasury buybacks at the long end are only a partial response to rising yields and growing debt. They also examine relative-value opportunities across rates and credit, including increased dispersion, record corporate issuance tied to the AI build-out and how steepening credit curves are creating opportunities for arbitrage investors.

The Macro Matters podcast is part of BI’s FICC Focus series.

Municipal separately managed accounts (SMAs) have exploded 16-fold in market share, becoming a predominant investment vehicle in the post-global financial crisis world, with tight spreads and low ratios making alpha elusive. In this episode of Masters of the Muniverse, Bloomberg Intelligence’s new head of municipal research and strategy, Matthew Gastall, sits down with two guests from JPMorgan, the world’s second-largest SMA provider. Dan Freise, senior portfolio manager at J.P. Morgan Asset Management, and Paul Jacobson, head of municipal strategy at J.P. Morgan Private Bank, unpack active trading strategies, high-conviction sector positioning, and the critical market risks on their radar.

Masters of the Muniverse is part of BI’s FICC Focus series.