October 28, 2020

Generally speaking, if you had stepped away at the end of February and decided to return to work this month you could not be faulted for thinking that everything is just hunky dory. Spreads in most sectors have retraced to pre-COVID levels (except subs off of sectors exposed to travel and leisure, e.g. Aircraft ABS and hotel-heavy CMBS) and some sectors are even tighter than prior to the outbreak. But things are different and not necessarily good; we have an upcoming election (with guaranteed surprises), we are in a recession and the recovery outlook is much debated (V, U, Swoosh, K which may or may not be short lived), we have an ongoing global pandemic (with no clear signs of abating and having killed over 1,000,000 worldwide) but the financial markets including structured products are performing extraordinarily well. Some investors are actually having a stellar year with opportunistic purchases during the March madness, while others continue to struggle and claw their way back this year having lost on average 20% (some down over 35%) during the selloff; A survey of structured product hedge funds (about $28 billion of NAV) showed them down approximately 6% YTD through September. So, as you read on keep in mind that as much as things seem fine, they are not.

COVID, the election, stocks hitting highs and yields hitting lows continue to be at the forefront of trading themes. Senior bonds in most sectors have retraced the spread widening and while subordinate spreads have also come in, they remain wide and dispersed.

Read Methodical Structured Products Commentary here.

About Solve Advisors, Inc. 

Founded in 2011, Solve’s mission is to deliver transparency to the famously opaque Fixed Income market. We provide the Fixed Income industry with the most comprehensive, accurate, and real-time pricing information and market color available.

Powered by machine learning and natural language processing, our sophisticated, flexible technology collects more data and market color when and how you need it. We house the largest dataset (500,000+) of bids, offers, and market color across five asset classes (Structured Products, Corporates, Bank Loans, CDS, and Municipals). Our powerful workflow tools eliminate the hassle of the BWIC process, consolidate dealer inventories, and streamline month-end for the back office, all in one place and at your fingertips.

To learn more, visit www.solveadvisors.com or contact us directly:  info@solveadvisors.com or +1-646-699-5041.