SAC publishes periodic research on a whole range of topics related to the bond market.

May 2014

"A Flatter Yield Curve: The Case to Hold Longer Dated Bonds""

While many expec a pick-up in U.S. economic activity in the second half of this year, Treasury rates remain low. This is a challenge for bearish bond investors who believe 2014 is the year of much higher yields. Less than a decade ago, under Chairman Greenspan (May 2004 - February 2006), a similar event occurred with a tightening of monetary policy. This is similar of today, where the Fed has indictated that the Federal Funds rate could begin to rise in the next couple of years which the Treasury market has moderately anticipated startling last year. In reviewing the chart of the yield curve comparison between 5/31/04 and 2/28/06 (page 2) we can see that 3 month bills increased by 355.6 bps and the five-year note increased by 80.8 bps yet the 30 year bond fell by 83.7 bps. <Read Full Version >

February 2014

"HealthCare Hospital Issues"

In our most recent Municipal Market Update – Outlook for 2014, we identified two sectors that fall under the category of revenue bonds that we believe are opportunities for investing in the tax-free space, the healthcare sector and airport sector. While not the traditional, essential services revenue bonds that SAC has historically invested in, these sectors are exhibiting attractive risk-adjusted returns for our tax-efficient portfolios. Read Full Version >

January 2014

"Benefits From Rolling Down the Curve"

EOne of the best strategies for making money investing in bonds is known as rolling down the yield curve. This key to this strategy is understanding the shape of the current yield curve and the value it brings. Today, the U.S. Treasury yield curve has normalized and is positively sloped or steep, meaning shorter term bonds are yielding less than longer term bonds. This strategy can outperform a buy and hold to maturity strategy. It requires buying longer term bonds that typically pay more interest and have higher rates than shorter term bonds and then selling the bond as it moves toward maturity. Read Full Version >