September provides investors with a calendar-driven “conundrum” all its
own. Low yields and wide spreads set the stage for a rebound for spread
products not unlike the one seen in Q2, now further aided by declining
energy prices. However we wouldn’t be surprised if risk appetites remain
muted ahead of Q3 earnings reports, given fears of more write-downs by
Financials, reduced leverage and the still weak housing market.
Navigating this terrain will be crucial over the next several weeks, and
should provide attractive – if sporadic - opportunities to add risk. |