Thin January

As hard as it is to grasp, one-twelfth of the year is already over. For the few of our readers who are goal-oriented, that means if you haven’t started adding good investments to your portfolio, your work for the next eleven-twelfths is harder.

The good news is that conditions for deal making remain propitious. Rates are low, including default rates, the economy isn’t slowing down (at least, not yet), and private credit and equity have plenty of dry powder to spend.

Regarding interest rates, it’s worth noting that the Fed’s dovish stance became firmer yesterday, greatly encouraging markets. First unveiled at year-end, this has stopped upwards Libor creep. The three-month rate, which rose from 2.3% over the summer to 2.8% in early December, has remained at that level.

This may explain less enthusiasm from floating rate investors. Last week marked the tenth consecutive week of outflows from retail mutual funds – this time $950 million. During that stretch $18 billion left loan funds, marking a significant turnabout from the first nine months of 2018 which had $12 billion of in-flows.