IGTA Journal - Autum 2020

WEEK IN REVIEW Week Ending: November 25, 2020 Equity Markets “Take O ” Economic Overview: Despite Covid-19 cases rising and restrictions increasing, holiday air travel continued to improve, with over a million people ying on Sunday – a pandemic high. We've been unable to visit our clients for most of the year, and we aren't alone. The number of airline passengers is still 60% below year-ago levels. However, markets are looking beyond 2020. The U.S. Global Jets ETF, composed of airline and air freight stocks, jumped in the aftermath of the P zer vaccine's preliminary results. Subsequent positive news from other vaccine candidates continued the rally in airline stocks. Is the market ahead of itself? In China, where the impacts of Covid-19 are in the rear-view mirror, passenger traf c is just 5% below December 2019 levels. We wish you and your loved ones a safe Thanksgiving, and we hope that the equity markets are right about 2021. Total Returns by Asset Class Year to Date Total Return Month to Date Total Return 3.07% 3.96% 4.47% 4.95% 7.08% 7.30% 8.83% 8.90% 11.34% 14.41% 0% 2% 4% 6% 8% 10% 12% 14% 16% 1-3 Year Treasury EMBI Tax-Exempt Munis High Yield Corporates U.S. Aggregate Global Aggregate Investment Grade Corporates Taxable Munis MSCI Global Index S&P 500 0.00% 3.69% 1.41% 3.77% 0.72% 1.39% 2.24% 1.51% 12.94% 11.34% 0% 2% 4% 6% 8% 10% 12% 14% Source: Bloomberg Highlights of the Week: • High Yield: High yield is engaged in a tug of war between positive vaccine news and surging Covid cases, but positive vaccine news is winning. High yield is up over 3% this month, with sectors like energy, leisure, and airlines leading the way. • Corporates: Merck & Co. (MRK) is set to acquire OncoImmune, a private biopharmaceutical company, in an all cash deal worth $425 million. Through the acquisition, Merck is betting on Oncolmmune’s late-stage coronavirus therapeutic candidate CD24Fc, which reportedly reduces the risk of respiratory failure or death by more than 50% in patients hospitalized with Covid-19. • Municipals: JFK Airport issued $324 million in bonds this week and some maturities were over 50 times oversubscribed. The initial yield on the longest maturity was 3.28%, but came down to 2.73% after adjusting for strong demand. If this deal is any indication, the municipal market appears to be optimistic on recent vaccine news and the prospect of increased air travel. • Securitized Product: This week the S&P CoreLogic Case-Shiller U.S. National Home Price Index showed that covid-induced demand caused home prices to jump by 7% annually in September – the largest annual gain since 2014. Prices are now nearly 23% higher than their last peak in 2006. Record low mortgage rates and limited supply continue to drive the price appreciation. • Equities: The U.S. equity market reached all-time-highs early in the week as political tensions eased and Covid-19 vaccine developments continued to progress. Energy and nancials were the best performing sectors, while real estate and health care lagged the broader market. LOS ANGELES | BOSTON | LONDON | MILAN © 2020 Payden & Rygel All rights reserved. PAYDEN.COM

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