Harnessing the Potential of Private Structured Credit

Private Structured Credit (PSC) presents a specific investment avenue, seeking to offer insurance investors yield pick-up vs public bonds, capital efficiency, risk mitigation via covenant protection, and sector diversification.

Economic Monthly – Businesses Ride to the Rescue

We now expect the U.S. economy to avoid a recession in 2024. Businesses are emerging as a backstop – largely due to high and rising profit margins, a manufacturing rebound and a resilient services sector. However, we do remain somewhat concerned about the strength of the consumer. Find out why in our latest Economic Monthly.

Relative Value & Tactical Asset Allocation Q2 2024

Decarbonization Metrics for Real Estate Investment

A World in Debt: US Treasuries

The Case for a U.S. Productivity Boom

Are Consumers Weakening?

New paper making the case for U.S. productivity. Drawing on many difference data sources that highlight why the U.S. economy is on the verge of a productivity boom.

A Second Trump Presidency?

President Trump could win the 2024 presidential election. When the incumbent presidential party presides over an improvement in the unemployment rate, it is likely to be returned to power. With unemployment at historic lows, unemployment is likely to get worse, creating headwinds for a Biden re-election.

Strategic Asset Allocation: Balancing Art and Science

Guy Haselmann, Head of Thought Leadership at MetLife Investment Management (MIM), recently sat down with Ruth Farrugia, Global Head of Insurance Asset Management at MIM, to discuss strategic asset management for Insurance Companies.

Gateway Markets and Core Property Types: Not What They Used to Be

What should be considered gateway markets and core property types today? The investing universe and real estate markets have evolved dramatically over the last few decades.  See the list of markets that now rank highly as gateways and which once-niche sectors could be labeled core property types under our proposed definitions.

Robust Jobs and Tight Credit: Will the Consumer Keep Spending?

Looking at the data of the first six weeks of the year, we have seen some promising economic indicators, with consumer health shored up by a robust job market. But we believe the U.S. economy is not out of the woods yet. Find out why in our latest Economic Monthly.

U.S. Real Estate Market Outlook – Lifting Fog

Politics, Debt and Recession – What Could Possibly Go Wrong?

After a strange — and surprisingly strong — 2023, we expect a paring back of global growth in 2024. For the U.S., we expect recession, while for Japan and China, we expect positive but decelerating growth. We expect European countries to avoid a recession in the first half of the year with improvement in the second half. We expect inflation to normalize toward central bank targets over the year.

The Final Countdown? Ballooning Treasury Issuance and The Rising U.S. Debt

Our latest article which discusses a range of scenarios for the U.S. fiscal outlook. We examine the underlying causes which make fiscal adjustment so complicated and consider the probability of further downgrades and outlook revisions.

Economy Monthly – Labor Market: On the Precipice?

The unemployment rate has been creeping up gradually since July, reaching 3.9% this past October according to the BLS. By some measures it is approaching a threshold traditionally considered indicative of a recession. Is the Labor Market on the precipice?

Economic Monthly – Well, Do You Feel Lucky?

Getting the House in Order. Take a look into our latest Economic Monthly as we highlight how we think the latest developments in Washington could play out. We also explore the state of the U.S. labor market, debt to GDP, 10 year treasury yields and inflation expectations.

Fall 2023 Real Estate Outlook - Is This What a Soft Landing Looks Like?

MetLife Investment Management’s latest real estate outlook highlights some early signs of opportunities for well-capitalized investors, as the fog begins to lift from the backdrop of a challenging economic outlook and disruptive real estate capital market conditions.

Relative Value & Tactical Asset Allocation Q4 2023

The paper highlights the expectations of key global economic drivers broken down by region and asset class, from MIM’s Global Economic & Market Strategy Team. It calls out the asset classes that they believe are over-valued or under-valued compared to the underlying fundamentals. This edition shares commentary on global growth, treasury yields, credit market valuations, US housing and US equities.

Economic Monthly – If It’s Fall, It Must Be Shutdown Season

The U.S. political situation is back into economic focus as a government shutdown looms, with funding set to expire on September 30 if no short-term funding agreements are passed. We do not expect a shutdown to change the trajectory of Federal Reserve policy. The 10-year Treasury may decline slightly in the short-run as it generally has after a shutdown, but equity markets have historically had a mixed response.

Real Estate Debt: Highest Yields in Decades

With yields rising to the highest level in decades, Will Pattison, Head of Real Estate Research & Strategy discusses inflations impact and opportunities he sees in Real Estate debt and commercial mortgages.

Emerging Market Debt Sovereigns 2023 Capturing Alpha Through Differentiation

Over the last 25 years, the EM investable universe has grown in breadth and depth to become one of the most intricate in the entire fixed income space. Its intricacy originates from a wide range of risk factors across geography, quality, and duration that can offer interesting alpha opportunities to investors when understood and properly differentiated.  

Greening the Grid: A Tipping Point in U.S. Renewable Energy Production

In our latest real estate insight, Jim Landau and Giuls Kunkel explore the layers of interconnection between a greener grid and renewable resources, and how the strengths, weaknesses, opportunities and threats associated with greening the grid may influence asset managers’ decarbonization strategies.

Insurance Insights | Relative Value & Tactical Asset Allocation Q3 2023

The Insurance Insights paper provided Relative Value & Tactical Asset Allocation insights for Insurance Clients and prospects and includes views on Global and U.S. Economies; Asset fundamentals, valuations, and technicals; multi-asset portfolio strategy, etc.

Global Risks 2023 – Midyear Review

In our midyear review of global risk, we assess current risks relative to our full-year 2023 outlook in January, including sticky inflation in the U.S. and Europe, and uncertainty related to the U.S.-China relationship.

Insurance Insights | Gauging S&P’s Proposed Changes to Its Risk-Based Capital Adequacy Methodology

Guy Haselmann recently sat down with Jingsu Pu to dig through the proposed changes S&P Global is considering to its Insurer Risk-Based Capital Adequacy Methodology. Jingsu will help assess what it could mean for insurers and their ratings.

Insurance Insights: The Challenges of Interest Maintenance Reserve (IMR)

Guy Haselmann recently sat down with Jingsu Pu to better understand the issues and complexities around Interest Maintenance Reserve (IMR). IMR was the most talked about topic at a recent conference attended by Jingsu.

Navigating Uncertainty – Risks and Opportunities in Commercial Real Estate

In our latest Real Estate market outlook, we detail how various cities and property types are positioned amid economic uncertainty and capital markets volatility and outline a framework for considering where real estate prices are in a market with low liquidity.

Unique Attributes of Real Estate Investments

Guy Haselmann, Head of Thought Leadership at MetLife Investment Management (MIM), recently sat down with William Pattison, Head of Real Estate Research at MIM to discuss real estate investing. Will helps break down the various sectors into understandable categories and mentions some of the challenges and new opportunities of each.

Insurance Insights | Relative Value & Tactical Asset Allocation – Q2 2023

Taming inflation is the main theme for global economies. Tightening monetary policy, slower growth and rising recession risk are all likely having an impact.

Disengagement, Division, or Diversification: the Future of Globalization

Since the twin crises of the pandemic and the Russian invasion of Ukraine, many have become worried about the future of globalization. In this article, we sketch out a few plausible paths forward, including disengagement, division and diversification, and conclude with our thoughts on markers to watch.

Short Duration Fixed Income: New Environment, New Opportunities

Guy Haselmann, Head of Thought Leadership at MetLife Investment Management, recently sat down with Scott Pavlak, Head of Short Duration Fixed Income, to discuss interest rates and the investment landscape in short duration bonds.

Opportunities in EM Debt with Tom Smith of MetLife Investment Management

We are very happy to have Tom Smith back from MetLife Investment Management. Tom is a repeat guest on the show, here to talk about emerging market debt again.

Investing in Water Infrastructure

Discussion on global opportunities in the rapidly growing - but under resourced - area of water infrastructure. The discussion covers areas such as clean waters journey, treatment plants, wastewater, storage, droughts and floods, and the technology that makes it all work. 

Insurance Insights | Relative Value & Tactical Asset Allocation - Q1 2023

The Insurance Insights paper provided Relative Value & Tactical Asset Allocation insights for Insurance Clients and prospects and includes views on Global and U.S. Economies; Asset fundamentals, valuations, and technicals; multi-asset portfolio strategy, etc.

Predicting the Pivot: Why 2%?

The Federal Reserve continues to focus on inflation when setting policy. Despite this, the recent Summary of Economic Projections shows the Fed cutting rates even as inflation remains above 2%. In this report we ask the following three questions: · What is so great about a 2% inflation target anyway? · Is it likely that the Fed would maintain a tight policy even when unemployment begins to rise? · How might we determine when a policy pivot is under consideration?

Emerging Market Debt: Where We Started, Where We Are, and Where We’re Going

EM portfolio team provides a comprehensive look at the many factors that have been impacting Emerging Market Debt. The paper looks at current valuations and offers a roadmap for capitalizing on the opportunities expected to unfold in 2023. 

Global Risks 2023: Recession, Inflation, and Central Banks

We expect a global recession with decelerating inflation in 2023. The report discusses upside and downside risks to our baseline, including the Fed’s inability to tame inflation, the Russia-Ukraine conflict’s effect on commodity and food prices, and slower than expected economic growth in China.

Buy Now, Pay Later: Early Warning Signs of a Weaker Consumer?

The reports explain how Buy Now, Pay Later loans could be a window into financial stress on certain groups of consumers.

NAICs Treatment of CLOs with Angela Best and Francisco Paez of MetLife Investment Management

Today we're talking about the pending changes the NAIC is proposing for the capital treatment of CLOs. We're joined by two experts today from MetLife Investment Management.

Technical Analysis Chart Pack: November 2022

As we went through all the charts in this report, a clear theme seems like that all markets were pricing in peaking inflation and Fed pivoting in last couple of weeks. G4 interest rates retraced sharply after a relentless rally. Dollar seems to have formed a peak. Commodity index looks like peaked as well, which usually leads a peak of inflation. DM equity market sentiment also turned positive. However, given that the long-term downtrend is intact, the current short-term upturn remains viewed as bear market rally in our view. EM equity looks relatively attractive.

Decoding a Mixed Economy

In the latest episode of “MIM Cuts to the Chase”, Tani Fukui examines the various economic cross-currents and provides a rationale for where she thinks the economy and Fed policy is headed in 2023.   

Four Scenarios: Recession, Soft Landing, Stagflation or the Status Quo

Economic forecasts are particularly uncertain right now, and an honest assessment requires considering multiple scenarios. We still expect a recession but see a soft landing as the most likely, off-base case scenario.

Can Climate Variables Drive Alpha?

In the latest podcast of “MIM Cuts to the Chase”, Jim Grace discusses why analyzing climate related variables should play a part of bottom-up research to determine appropriate credit spread levels and how they can lead to identifying alpha generating opportunities.

Insurance Insights | Core Real Estate for U.S. Insurers

Core real estate equity exposures offer a multitude of benefits to diversified multi asset class portfolios. Rising inflation and risk-based capital (RBC) changes that took effect 12/31/21 are fueling broader interest by insurance companies in commercial real estate equity. This report outlines the rationale and the primary factors to consider.

Model-derived Risk-based Capital for Collateralized Loan Obligations: How Will the National Association of Insurance Commissioners’ Proposal Impact U.S. Insurers’ Investment Strategies?

At the June 9, 2022 meeting of its Valuation of Securities Task Force (“VOSTF”) the National Association of Insurance Commissioners (“NAIC”) discussed a staff recommendation to change how the risk-based capital (“RBC”) for insurers’ investments in collateralized loan obligations (“CLO”) is determined.

Opportunities in Moderate Income Rental Housing

Over the past several decades, the residential rental sector has grown from relative obscurity to become one of the largest and most important institutional investment asset classes. The sector offers a wide range of investment options, including a range of risk profiles (mortgages, stabilized assets, transitional assets, ground up development), housing formats (high-rises, garden apartments, manufactured housing, among others), and geographic options. In recent years, investors have also begun segmenting investment options by the income profiles of residents, and new targeted strategies have emerged. One such strategy that we believe offers attractive risk adjusted returns and supports the need for more affordable housing is Moderate Income Rental Housing.

This Year’s Half-Hearted Policy Response a Harbinger for Things to Come

Macro paper on trends in China including policy shifts, demographics, economy trends, stimulus policy all leading toward the 20th Party Congress.

Investment Opportunities in Private Commercial Mortgage Investments

We believe private U.S. commercial mortgages can fit well in a multi-asset portfolio due to their historically favorable risk-adjusted returns versus other asset classes, as well as their attractive income return potential and lower historical loss rates versus public corporate bonds with similar risk profiles. Given these attributes and at times opaque nature of the U.S. commercial mortgage market, we believe selecting investment management platforms with experience, resources, and scale are able to better source and manage commercial mortgage investments.

Insurance Insights | Relative value and tactical asset allocation

The key economic and market themes remain downbeat. We continue to prefer up-in-quality credits and underweight risky assets. Global economic growth could continue to slow over the next several months. U.S. 10-year yield and inflation are likely to have peaked, which could result in a fully inverted yield curve. A short, sharp recession is likely in the mid-to-late next year. The credit cycle is aging fast, given tightening lending standards, slowing profit growth, and margin pressures.

Carbon Neutrality in Real Estate

Our 3rd paper in MIM’s Carbon Neutral series focuses on government legislation and regulation, as well as incentives that may stimulate the production of renewable energy.