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DISCLOSURES: The information provided herein is furnished by Miles Capital, Inc. solely for informational purposes and is confidential. It may not be reproduced or distributed to anyone else without prior consent. This document contains the current views of Miles Capital and is not intended to be, and should not be interpreted as, a recommendation of a particular security, product, or investment strategy. Such opinions and predictions are subject to change without notice. The strategies described in the presentation may not be suitable for all investors. There is no assurance that any of the objectives described will be achieved. This information contained herein does not take into account the particular investment objectives or financial circumstances of any specific person or entity who may receive it. You should consult your tax or legal advisor before making an investment, and investors are advised to thoroughly and carefully review financial, legal, and tax consequences of all investments to determine suitability. Investments in alternative assets may be illiquid and present significant risks. Past performance is not a guarantee of future results. There can be no guarantee that any investment strategy discussed in this Presentation will achieve its investment objectives. As with all strategies, there is a risk of loss of all or a portion of the amount invested. Diversification does not ensure a profit or protect against market loss.

Market Indicators: January, 2020


Miles Capital, Investment Advisor

January 13, 2020


The massive dynamics of global growth and trade were again center stage for the quarter, but there were some important differences. The markets saw a much improved tone to trade as the news hit of at least a potential completion to Phase One of the deal with China soon. Additionally, the positive momentum on the USMCA deal with China and momentum was well received. The Federal Reserve's (Fed's) rate cuts in the third and fourth quarters had pronounced effects upon the economy and the financial markets.  The Fed also indicated they would probably be inclined to stay on the sidelines for a period, unless prompted by higher inflation.  These actions drove positive business momentum, increased corporate issuance, and generally very positive returns in both the fixed income and equity markets for the fourth quarter.


Shorter maturity treasury rates (shorter than 3 years) moved lower for the quarter due to the Fed rate decreases. The outlook for global growth improved slightly, and the Fed's stated willingness to let inflation run above their long-term target for a period of time, helped push longer interest rates higher, with the 10-year U.S. Treasury rising 24 basis points to 1.92 percent. The increases in longer rates eliminated pockets of yield curve inversion. Shorter maturity rates are now no longer higher than longer maturity rates, which normalizes the slope of the curve and somewhat lessens concern of a potential economic recession. For the year, interest rates dropped strongly across the entire maturity spectrum.


Many sectors of the investment grade markets performed very well in 2019, including corporate bonds, government-backed mortgage bonds, municipal bonds, and treasury securities.   The Bloomberg Barclays Aggregate Bond Index (Agg), a broad measure of the investment grade taxable U.S. Bond market, rose by 8.7 percent for the year. The average return for the Agg index over the past decade has been 3.74 percent.


Gazing ahead, a repeat of this fixed income performance will be difficult to achieve in in 2020, solely due to the magnitude. But we believe our clients could still see quite reasonable performance simply based on the Fed hold on rate action pending higher inflation.

Disclosures
 

The views expressed herein are the current views of Miles Capital as the stated date and are provided for informational purposes only. They are believed to be correct, but accuracy and completeness cannot be guaranteed and should not be relied upon for legal or investment decision purposes. All expressions of opinion and predictions presented are subject to change without notice. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is not a guarantee of future results. Diversification does not ensure a profit or protect against market loss. As with all strategies, there is a risk of loss or all or a portion of the amount invested.