Conning ConnText Podcast: Concerns Grow About Economic Conditions for Remainder of 2024 as Inflation Lingers, Rates Remain Elevated, Job Growth Continues
April 23, 2024
Opportunities in Structured Products; Insurer Interest Growing in Esoteric ABS
HARTFORD, CT – April 23, 2024 —Leading global investment management firm Conning has posted its latest Conning ConnText quarterly podcast, which discusses the growing economic challenges the U.S. faces in 2024, as well as opportunities in structured products and especially esoteric assert-backed securities (ABS).
Rich Sega, Conning’s Global Chief Investment Strategist and host of the podcast, said it’s too early to gauge the economic impact of the collapse of the Francis Scott Key Bridge in Baltimore, which was hit by a container ship. But the bigger jolt for markets was the April report on March jobs gains, which exceeded 300,000. “Nobody saw that coming,” Sega said.
As a result, U.S. Federal Reserve interest rate cuts are much less of a sure thing during the first half of the year. The likelihood decreases in the second half prior to November’s highly contentious national elections. Sticky inflation could lead to rates remaining higher for longer, possibly leading to some type of economic slowdown, either this year or next. And if no recession or slowdown occurs, rates may remain elevated.
Structured products – which consists of a broad range of residential- and commercial-backed securities (RMBS, CMBS) and asset-backed securities (ABS) – are a prominent holding for many insurers, and there are some pockets of opportunities in RMBS and ABS, said Michael Nowakowski, Head of Structured Products. A resilient U.S. consumer helps in that regard, although the less-than-prime borrowers are showing some signs of stress.
In addition, the ABS subset of esoteric ABS, which features less traditional collateral, is of increasing interest for its diversification and yield potential. “We look at a lot of that for our clients and it does seem to be emerging as a more popular asset class, particularly with insurers,” said Nowakowski.
To access the podcast and subscribe to the Conning ConnText podcast, click here.
ABOUT CONNING
Conning (www.conning.com) is a leading investment management firm with nearly $120 billion in global assets under management as of March 31, 2024.* With a long history of serving the insurance industry, Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America. Conning is part of the Generali Investments platform, which has approximately $740 billion in assets under management.**
* As of March 31, 2024, includes Conning, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc., Goodwin Capital Advisers, Inc. and assets sub-advised by Conning subsidiary, Octagon Credit Investors, LLC (collectively, “Conning”)
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Media Contacts
Myra Lee
Conning
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myra.lee@Conning.com