Moody's Analytics Articles
Following Jerome Powell's testimony of December 11, Moody's long-term Baa industrial company bond yield fell to 3.98%, which was its lowest close since the 3.95% of August 28, 2019.
Using multiple scenarios in CECL can temper some of the volatility in the economic forecasts – the part that results from our inability to forecast the economy with complete precision.
More than 20% of the European Union's population is at least 65 years of age. Partly because of an unprecedented aging of the EU's slowly growing population, the average annual rate of economic growth for the EU has slowed from the 2.7% of 2004-2007 to the projected 1.2% of 2019-2020.
Auto retention values were not immune to the slowdown in the U.S. economy in the third quarter. Wholesale used-vehicle value retention dropped 1.7% in September on a year-over year basis. This at a time when U.S. economic growth slowed from 3% a year earlier to about 2%
U.S. business activity has not been exceeding its reach, and that will help extend the long-lived bull market and record-long economic recovery.
Our findings conclude that the recent rent regulations passed in three states will likely not have a material impact on supply growth – for either affordable housing or for market-rate apartments. This means that landlords and investors concerned with market-rate apartments are not likely to change investment or development behavior.
We look at climate risk and consider how a heating planet might impact a bank's performance
For January-October 2019, the corporate bond issuance by U.S. based businesses grew by 12.4% year over year to $871.0 billion for investment-grade obligations and increased by 15.2% annually to $186.5 billion for high-yield offerings.
The market value of U.S. common stock has been setting new record highs. However, U.S. corporate credit spreads for both bonds and loans have yet to approach their lows of the current business cycle upturn, never mind their existing record lows.
The dreaded inverted yield curve is gone, but perhaps not for long. Following October 30's paring of the federal funds rate's midpoint to 1.625%, the fed funds rate is less than the recent 1.68% 10-year Treasury yield for the first time since May 2019.
The credit rating revisions of loan-only high-yield issuers reveal a higher frequency of rating downgrades compared to issuers with outstanding high-yield bonds.
The Opportunity Zone (OZ) program offers substantial federal tax incentives in exchange for capital investment in under-resourced areas. This creates challenges for investors, policymakers and other stakeholders when trying to evaluate the more than 8,700 Opportunity Zones in their entirety. In this paper, we leverage our opportunity zones
There is no one way of statistically explaining the bond yield spreads of high-yield corporate bonds. However, one of the better approaches employs a multi-variable regression model and generates a highly significant adjusted r-square statistic of 0.89.
The economy may not be top of mind for voters in every election, but it is hardly ever further than a close second. This is the principle underpinning Moody's Analytics presidential election models.
Canada's housing market seems on course for a soft landing given the lack of deterioration in mortgage debt arrears so far.
When banks manage risk, conservatism is a virtue. We, as citizens, want banks to hold slightly more capital than strictly necessary and to make, at the margin, more provisions for potential loan losses. Moreover, we want them to be generally cautious in their underwriting. But what is the best way to arrive at these conservative calculations?
Financial markets have been buffeted by changing views regarding the trade dispute between China and the United States. Nevertheless, the direction taken by earnings-sensitive securities will ultimately be determined by the outlook for profits.
Despite today's ultra-low yields, Treasury bonds may still pay off handsomely once recession strikes.
Despite risks to the downside, the country will remain one of the world's fastest-growing economies.
Nothing quite increases the risk of debt repayment like a drop in the income that funds the servicing of outstanding debt.
High levels of foreign direct investment lower the risk of corporate leverage.
The corporate bond market has proven to be resilient amid recent equity market volatility. Moreover, despite a slew of bearish headlines, the market value of U.S. common stock's latest low of August 14 was still a huge 20.8% above its low of December 24, 2018, while August 2019's month-long average of 19.0 points for the VIX was well under the 25.0 points of December 2018.
The traditional build-and-validate modeling approach is expensive and taxing. A more positive and productive validation experience entails competing models developed by independent teams.
On September 9, the senior unsecured bond rating of Ford Motor was lowered from Baa3 to Ba1, where the downgrade constituted a ratings reduction from investment- to speculative-grade (or high-yield). Because investor mandates often prohibit the inclusion of high-yield bonds in investment-grade portfolios, such a downgrade can quickly lower the prices of adversely affected bonds.
This brief paper outlines Senator Warren's reform plan and evaluates its actuarial, macroeconomic and distributional impacts.
Based on simulations of the Moody's Analytics model of the global economy, this paper examines the consequences for the U.S. and global economies in different scenarios regarding how the trade war between the U.S. and China will unfold.
The month-long average for the expected default frequency metric of U.S./Canadian high-yield issuers climbed from August 2018's 2.38% and July 2019's 4.16% to 4.59% in August.
The Bureau of Economic Analysis recently lowered its estimates of corporate profits for 2017 and 2018. The downward revision of nonfinancial-corporate profits mostly stemmed from a major upward revision of employee compensation costs and a slight downward revision of nonfinancial-corporate gross value added, where GVA is a proxy for revenues net of non-labor costs.
A hard landing in China remains a looming threat to the global economy and especially to the rest of Asia. This paper considers the consequences of a China debt crisis for the Chinese and global economies, with a special focus on Southeast Asia and emerging markets.
The importance of accurate and timely data on household credit conditions became clear during the global financial crisis. Quickly rising delinquencies and foreclosures should have been a warning to lenders and regulators to significantly tighten the spigot on new lending that was wide open during the pre-crisis boom. However, partially due to data limitations, many financial institutions were surprised by the weakening of household balance sheets. By the time they realized the severity of the problem, it was too late to act.
