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Resilient but not invincible

By Bernhard Eschweiler, PhD3 minute read

  • The US economy avoided recession despite Fed tightening …
  • … thanks to low interest-rate sensitivity and fiscal pump priming
  • The economy may keep growing even as these supports fade …
  • … but it has not become invincible and more cracks are likely to emerge

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The Inflation Trap

By Bernhard Eschweiler, PhD3 minute read

  • Disinflation progress since late 2022 has been impressive
  • But conditions have not sufficiently normalized for 2% inflation to persist
  • Inflation may drop to 2% temporarily but at risk to finish 2024 closer to 3%

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Housing slump supports Agency CRT notes

By Bernhard Eschweiler, PhD3 minute read

  • Homebuyer and homeowner conditions diverge sharply …
  • … undermining home sales but supporting house price appreciation
  • Agency CRTs offer good value for housing-related exposure

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Sustainability at ZAIS

By ZAIS Group5 minute read

Read the inaugural report: "ZAIS 2022 Sustainability Report - Investing in our future"

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Dipping a toe back into CMBS

By Bernhard Eschweiler, PhD3 minute read

  • Commercial real estate fundamentals are solid except for office properties
  • But refinancing is a challenge for CRE loans with weak NOI growth
  • We prefer A/AA tranches of new conduit CMBS issues

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More leveraged loan defaults in the pipeline

By Bernhard Eschweiler, PhD3 minute read

  • The impact of Fed tightening has not yet fully impacted leveraged loans
  • Default rate expected to rise at least 3% points over next 18 months
  • Sectors with higher share of sub-B-flat rated loans most at risk
  • CLOs protected but not immune as leveraged loan default risk rises

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BB CLO Market Update June 2023

By Denise Crowley, Head of Structured Investments.
ZAIS Group — 3 minute read

BB CLO tranches are trading at higher yields of 12-18% due to wider spreads and market conditions. Caution is advised on tranches trading towards the higher end of the range. Potential market volatility is driven by economic indicators, inflation, liquidity concerns, and yield curve inversion. However, there are reasons for optimism.

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Diverging household health

By Bernhard Eschweiler, PhD3 minute read

  • Financial health of lower-income households likely to deteriorate...
  • ...spelling risks for sub-prime consumer loans and mortgages
  • We see continued opportunities in careful credit selection

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