Things are challenging but not all doom and gloom. While the global pressure of higher rates transmits from the financial sector to the real economy, we see a very low likelihood of an all-out contagion in 2023, as was the case 15 years ago. Asset prices may deteriorate, but there will be plenty of opportunities. This is the “Your Move” edition. The wisdom of the “wait-and-see” approach gets old fast in finance; investment managers’ clients want them to put money to work, not be a cash proxy. The investing environment continues to remain murky, but the best asset managers are successfully navigating these challenging conditions by prudently allocating capital to new types of assets and novel structures.

Key Insights

• Structured Products: Credit Spreads Tighten
• CMBS: Maturities Knocking on the Door
• Non-Agency RMBS: Tighter Primary Non-QM Spreads
• Agency MBS: Lack of Supply and Hedging Challenges
• Consumer ABS: Loss Rates Increasing
• Funding: Favorable
• SOFR Credit Adjustment: Free-for-All