The U.S. credit cycle may be in the late innings of the game, but there are still some good plays left.
Estimated Forward Default Rate is the rate (%) determined by result of an analysis of the factors affecting the future default of a class or sector of fixed income securities with the potential for default in the future.
Realized Annual Default Rate is the rate (%) of default of a class or sector of fixed income securities based on the actual, observed rate of default.
An Option-Adjusted Spread (OAS) is a measure of risk that shows credit spreads with adjustments made to neutralize the impact of embedded options. A credit spread is the difference in yield between two different types of fixed income securities with similar maturities.
“Tights” refers to the level of spreads between two series. A “tight” is a small spread. “Record tights” refers to levels of tightness that set some form of record low level.
The yield curve shows the relationship between yields and maturity dates for a similar class of bonds.
A company may be deemed “refi-eligible” if its debt or overall financial position has attributes making it eligible for refinancing.
The JP Morgan Corporate Emerging Market Bond Index (CEMBI) is a global, liquid corporate emerging markets benchmark that tracks denominated corporate bonds issued by emerging markets entities.
The Federal Reserve Board ("Fed") is responsible for the formulation of U.S. policies designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.
Duration is a measure of the price sensitivity of a fixed-income security to an interest rate change of 100 basis points. It is calculated as the weighted average of the present values for all cash flows.
Emerging markets (EM) are nations with social or business activity in the process of rapid growth and industrialization. These nations are sometimes also referred to as developing or less developed countries.
A current account balance summarizes the flow of goods, services, income and transfer payments into and out of a country
Carry refers to a differential in interest rates across sectors, such that tactical profits could be generated by trading between them.
Forecasts are inherently limited and should not be relied upon as indicators of actual or future performance.
All investments involve risk, including possible loss of principal.
The value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested, and can be affected by changes in interest rates, in exchange rates, general market conditions, political, social and economic developments and other variable factors. Investment involves risks including but not limited to, possible delays in payments and loss of income or capital. Neither Legg Mason nor any of its affiliates guarantees any rate of return or the return of capital invested.
Equity securities are subject to price fluctuation and possible loss of principal. Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed income securities falls.
International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.
Commodities and currencies contain heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors.
Past performance is no guarantee of future results. Please note that an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.
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