Guido Mieth/DigitalVision via Getty Images Performance factors During the quarter, the Fund held a greater proportion of SOFR-indexed floating-rate securities compared to its peer group. The SOFR Index rate consistently exceeded the effective Federal Funds rate, while the fixed-rate curve remained flat for much of the period. On average, the SOFR Index rate was 3.66%, slightly higher than the Fede...
Guido Mieth/DigitalVision via Getty Images Performance factors During the quarter, the Fund held a greater proportion of SOFR-indexed floating-rate securities compared to its peer group. The SOFR Index rate consistently exceeded the effective Federal Funds rate, while the fixed-rate curve remained flat for much of the period. On average, the SOFR Index rate was 3.66%, slightly higher than the Federal Funds rate at 3.64% and the 90-day Treasury bill average at 3.65%. Although the spread between SOFR and other indices narrowed, this differential still contributed positively to the Fund's performance for the quarter. The increased allocation to SOFR-indexed securities led to a higher weighted-average-life (WAL), closing the quarter at 107 days. Meanwhile, the Fund's focus on floating-rate versus fixed-rate securities resulted in a shorter weighted-average-maturity (WAM), which stood at approximately 27 days as of March 31, less than that of the peer group. Portfolio outlook The war in the Middle East has complicated the Fed's dual mandate of price stability and full employment, with elevated oil prices pressuring inflation over the near term. With the Fed potentially on hold in 2026, money fund yields remain attractive relative to alternatives. The sector saw continued growth, with assets hitting a new record at over $7.8 trillion during the quarter. The Treasury curve steepened in the middle of March as uncertainty began to build around the duration of the conflict in the Middle East. We took advantage of elevated Treasury yields to extend in fixed securities. As a result, the fund currently sits at a WAM of 27 days compared to 14 days at year end. We will continue to look for attractive entry points in fixed yields and prefer shorter tenor SOFR floating bonds as a repo alternative. Fed Funds futures are currently pricing in less than one cut in 2026. As in any interest rate environment, the Fund's primary objectives of safety and liquidity will remain. Performance Fo...
Maximusnd/iStock via Getty Images After a very good 2023 and 2024, I wrote the following in my 2024 annual letter: “given the somewhat elevated valuation multiples among stocks I have looked at, I think I wouldn't be too upset if I underperform the S&P 500 next year in case we see another >25% performance year for the index in 2025. There are times when it may make sense to underperform the index ...
Maximusnd/iStock via Getty Images After a very good 2023 and 2024, I wrote the following in my 2024 annual letter: “given the somewhat elevated valuation multiples among stocks I have looked at, I think I wouldn't be too upset if I underperform the S&P 500 next year in case we see another >25% performance year for the index in 2025. There are times when it may make sense to underperform the index for you to be able to outperform over a longer period of time.” Since then, the MBI portfolio has been basically flat, whereas the index has generated a +30% return in the meantime. So, I certainly got my wish granted, even though I don’t seem to feel great about it today! If Buffett read this earlier sentence, I’m not sure he would be pleased about such sentiment. Back in a 1997 shareholder letter , he actually took a dig at such strange behavior among investors: “A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.” Berkshire did just fine in 1998, but started materially underperforming the index in 1999, just when the internet mania went into overdrive. Source: KoyFin After such un...
Sweden picked France’s Naval Group SA to supply four new frigates in an estimated $5 billion deal which paves the way for the Nordic state to play a bigger role in NATO’s maritime defenses. The decision marks the start of negotiations with the selected supplier, Prime Minister Ulf Kristersson and Defense Minister Pal Jonson told reporters in Stockholm on Tuesday. The vessels will be built at the L...
Sweden picked France’s Naval Group SA to supply four new frigates in an estimated $5 billion deal which paves the way for the Nordic state to play a bigger role in NATO’s maritime defenses. The decision marks the start of negotiations with the selected supplier, Prime Minister Ulf Kristersson and Defense Minister Pal Jonson told reporters in Stockholm on Tuesday. The vessels will be built at the Lorient shipyard in Bretagne and first deliveries are to begin in 2030. The plan to acquire four new frigates marks an increase in ambition for the Swedish navy which has until now primarily focused on patrolling its own rocky and shallow coast with smaller craft. With the new capability, the newest NATO member will be able to take a broader role further offshore in missions to waters like the North Sea, the Mediterranean and the Red Sea. The other contenders in the race were Britain’s Babcock International Group Plc and Swedish Saab AB as well as Spain’s Navantia SA. Sweden became the 32nd member of the North Atlantic Treaty Organization in March 2024 and has since become more active overseas. It sent 600 soldiers to beef up a joint defense force in Latvia this year and has agreed to lead the alliance’s forward land forces contingent in northern Finland. It has also become more active in monitoring vessels believed to be part of Russia’s so-called shadow fleet, boarding several at sea in order to check the paperwork and seaworthiness of these often patchily maintained commercial boats. Denmark is also in the middle of a tender for new frigates, while Norway last year selected BAE Systems Plc to supply Type 26 frigates for its navy. Sweden will host NATO’s foreign ministers in the southern coastal town of Helsingborg later this week. Swedish leaders have said they want to smooth over recent tensions in the alliance amid accusations by the US amid that European members are not contributing enough.
Greggory DiSalvo/iStock via Getty Images Even though I have been worried about the US economy since April of last year, it wasn't until August that I ended up saying that a recession is almost guaranteed. Economic conditions began rapidly deteriorating leading up to that point. And honestly, much of the data has even worsened since then. In my last article about this topic, published earlier this ...
Greggory DiSalvo/iStock via Getty Images Even though I have been worried about the US economy since April of last year, it wasn't until August that I ended up saying that a recession is almost guaranteed. Economic conditions began rapidly deteriorating leading up to that point. And honestly, much of the data has even worsened since then. In my last article about this topic, published earlier this month, I looked at weakness in the labor market. And what I found was frankly disturbing. Even parts of the economy that are showing growth are showing signs of weakening. And unless something big changes, a combination of factors that include tariffs, broader inflationary pressures, high oil prices because of the war against Iran, and persistently high interest rates, not to mention a true cost of living crisis that has crushed the consumer, will push us into a recession in the coming months. In the hopes that I might be wrong, since I don't want a recession, I decided to dig into some new data. What originally started off as a dive into the manufacturing sector turned into a broader assessment of how the economy looks right now. Contrary to promises that American manufacturing will see a renaissance, we are actually seeing the opposite occur right now. Consumers are also becoming increasingly stressed, and the US government will, over the next few years, be ill-equipped to help contend with a worsening economic climate. Even though my portfolio is mostly long, I do worry that we will see a decline at some point. And I would urge investors to tread very cautiously as a result. The Industrial Economy Isn’t Doing So Hot Author - ISM Data It's always easy to cherry pick data to point toward a positive economic picture. One good example of this would be the ISM Manufacturing PMI data. In the chart above, you can see how, for the last four months now, we have been in a state of expansion. Production is growing and new orders are increasing also. At first glance, this is fantast...
Katharina13 The Reserve Bank of Australia (RBA) expects inflation to remain above its 2% to 3% target range until at least 2027, according to the minutes of its May 2026 monetary policy meeting released on Tuesday. The minutes shed light on the board’s 8–1 vote to raise the benchmark cash rate by 25 basis points to 4.35%. This third consecutive rate hike of the year has effectively unwound the ent...
Katharina13 The Reserve Bank of Australia (RBA) expects inflation to remain above its 2% to 3% target range until at least 2027, according to the minutes of its May 2026 monetary policy meeting released on Tuesday. The minutes shed light on the board’s 8–1 vote to raise the benchmark cash rate by 25 basis points to 4.35%. This third consecutive rate hike of the year has effectively unwound the entirety of last year’s monetary easing cycle, as policymakers scramble to contain sticky domestic price pressures. According to the central bank, a material pickup in inflation during the second half of 2025 has proved more persistent than anticipated, carrying significant momentum into 2026. The board noted that while tight domestic capacity constraints originally drove prices higher, escalating fuel and commodity costs stemming from the Middle East conflict have added severe external inflationary pressure. On the economic front, Australia’s Westpac–Melbourne Institute Consumer Sentiment Index rose 3.5% mom in May to 83, rebounding from April’s 2½-year low of 80.1. The S&P/ASX 200 Index rose 0.98% to 8,594 in morning trade, reversing losses in the prior two sessions. The Australian dollar slipped to around $0.71, reversing gains from the previous session. More on Australia: EWA: Why Australia Is Missing Out On The Tech-Led Rally EWA: Australian Financials May Struggle With A Flattening Yield Curve Oil shock putting global rate hikes back in play Australia logs first trade deficit in over 8 years, export dip and import spike Seeking Alpha’s Quant Rating on iShares MSCI Australia ETF
Three of Asia’s most vulnerable economies are showing rising strains as their central banks come under pressure to tighten policy even as the economic hit from the Iran-war oil shock deepens. Indonesia, the Philippines and India are already grappling with capital outflows and free-falling currencies as Middle East tensions hurt consumers and companies alike. Now, global bond ructions are piling on...
Three of Asia’s most vulnerable economies are showing rising strains as their central banks come under pressure to tighten policy even as the economic hit from the Iran-war oil shock deepens. Indonesia, the Philippines and India are already grappling with capital outflows and free-falling currencies as Middle East tensions hurt consumers and companies alike. Now, global bond ructions are piling on further pressure. Higher US bond yields drive up the dollar and reduce the appeal of emerging-market assets, fueling capital outflows from Asia. That raises the burden of servicing dollar-denominated debt and pressures central banks to raise interest rates to defend their currencies and boost the appeal of local debt, even as domestic growth is set to weaken — leaving authorities in a catch-22. “Growth in much of the region is set to come under greater pressure, leaving central banks in a bind whether and how to respond to soaring price pressures,” said Frederic Neumann , chief Asia economist at HSBC Holdings Plc. “The going may get tougher still. We are not out of the woods yet.” Elevated oil prices and inflation concerns have pushed government bond yields around the world to multiyear highs, with 30-year Treasury yields climbing above 5% and nearing their highest levels since 2007. The jump in US yields has intensified pressure across emerging Asia. Aside from China’s yuan, all major Asian currencies have weakened since the Iran war, with the Philippine peso, Indian rupee and Indonesian rupiah among the region’s worst performers . A Bloomberg index of Philippine bonds has lost 13% for dollar-based investors, the steepest decline in emerging Asia. Bank Indonesia is widely expected to raise interest rates on Wednesday after stepping up intervention to defend the rupiah, which has plumbed new record lows. “Even that would provide only brief respite though,” said Jason Tuvey , deputy chief emerging markets economist at Capital Economics. “Putting the currency on a more solid...
OECD Secretary General Mathias Cormann discusses the impact of the conflict in the Middle East on the global economy, saying the Iran war is putting "downward pressure on growth and upward pressure on inflation." He speaks to Bloomberg's Oliver Crook on the sidelines of a Group of Seven meeting in Paris. (Source: Bloomberg)
OECD Secretary General Mathias Cormann discusses the impact of the conflict in the Middle East on the global economy, saying the Iran war is putting "downward pressure on growth and upward pressure on inflation." He speaks to Bloomberg's Oliver Crook on the sidelines of a Group of Seven meeting in Paris. (Source: Bloomberg)
Nicolas Bickel, chief investment officer at Edmond de Rothschild Private Bank, says higher bond yields for an elongated period could pose a risk to equities, "especially the ones that are highly indebted, even hyperscalers." Bickel speaks on Bloomberg Television. (Source: Bloomberg)
Nicolas Bickel, chief investment officer at Edmond de Rothschild Private Bank, says higher bond yields for an elongated period could pose a risk to equities, "especially the ones that are highly indebted, even hyperscalers." Bickel speaks on Bloomberg Television. (Source: Bloomberg)