In a multi-segment appearance on Bloomberg TV, Voya Investment Management Managing Director and Head of Asset Allocation Barbara Reinhard said since the Federal Reserve’s most recent meeting, “bond yields peaked, and equity started to struggle,” which has “been a realization, and incorporating new information from the Fed that they are going to count this current surge in inflation towards their long-term goal of meeting two percent. And the change in that is that the markets are pulling towards the expectations that the Fed will start hiking rates into 2022.” Asked about a downside threshold for bond yields where she might become “a little bit more concerned,” Reinhard said, “when bond yields get down that low, they don’t become quite as an effective hedge against Treasurys, and that is very concerning, especially for people that are asset allocators. And unfortunately, if they go up too high, it starts to scuttle some parts of the more cyclical avenues in the market, such as homebuilders and cyclicals.”
Kiplinger reported the expectations-beating jobs report “was Wall Street’s central focus Friday, and the driving force behind new record highs in all three of the major stock indexes,” after the Labor Department reported 850,000 jobs created in June, beating analysts’ expectations of 720,000. This reaction came despite the unemployment rate, “which ticked higher to 5.9%, from 5.8% in May, and exceeded the 5.6% figure economists were looking for.” Voya Investment Management Head of Multi-Asset Design Amit Sinha called the report “effectively a goldilocks report for both the economy and markets,” adding, “It validates the growth story while reducing fears of the Fed taking away the punch bowl anytime soon.”
A press release carried in Business Wire reports Centaurus Renewable Energy, developer “of the Arroyo Solar & Storage Project in McKinley County, New Mexico, announced today that it has closed a $70 million construction bridge loan facility provided by Voya Investment Management, the asset management business of Voya Financial.” The credit facility “will be used to make payments for project equipment and for other development and construction expenses.” Voya Investment Management’s Direct Infrastructure team, led by Tom Emmons and Ed Levin, organized the transaction.
In an appearance on Bloomberg TV’s Bloomberg Markets: The Close, Voya Investment Management Fixed Income CIO Matt Toms discussed the debate over when a tightening of Federal Reserve policy is likely to begin. Toms said the Fed is “trying to keep the optionality to taper before December ... and they’re going to go into Jackson Hole and debate, is a September announcement likely to get going?” Toms said the “big debate is do you start in October after a September announcement, or do you wait for the new year?” Regarding the recent bond market turmoil, Toms said there was “a whole rate cycle in the month of June, to where Fed rate hikes or the talk of taper caused a selloff, and then the immediate feedback is, oh dear, what if they do begin to become less dovish?” As a result, Toms said fixed-income markets “begin to already price in the what-if scenario once they start to move.” Toms said that means the “very long end of the bond market” is unlikely to move out of the 1.5-2% range on the 10-year Treasury bond, “and that’s ultimately a really good predictor of the terminal Fed funds rate, one-fifty to two percent.”
MarketWatch reported that as more Americans emerge from lockdowns, and those in the West seek to escape extreme heat, “the appeal of going anywhere, even ‘nowhere special,’ has deepened.” However, skepticism remains about “gathering in a movie theater with strangers,” and commercial property bond investors “weren’t always thrilled about the big, boxy setup of these buildings even before the pandemic hit.” Voya Investment Management Head of Securitized Investments Dave Goodson said in an interview, “We didn’t like movie theaters, generally to speak of, even pre-COVID,” adding “that upkeep can be expensive, even before thinking about what retrofits might be needed to attract another kind of tenant if a theater chain goes out of business.” Goodson said, “Uncertainty around the space, that’s been accelerated with COVID. It forces us to be more cautious.”
Voya Investment Management (Voya IM) announced today that its private credit platform completed the first close of a new infrastructure debt fund focused on project financing in the renewable energy space. With over $300 million in commitments, the first close comes on the heels of Voya IM’s hiring of Tom Emmons and Edward Levin, co-heads of Voya IM’s direct infrastructure team responsible for the origination, underwriting, structuring and management of mezzanine and stretch senior opportunities in renewable energy infrastructure projects.
Ignites reports, “The old days of sales teams determining who handles each advisor based on where the client lives and the size of its portfolio are over, distribution executives say.” Voya Investment Management Head of Distribution Enablement and Intelligence Jane Conway said the rapid shift to hybrid sales and digital engagement has accelerated changes in how sales teams cover advisors. According to Conway, that “means moving away from traditional coverage models based on ‘zoning’ that mapped out how wholesalers could most efficiently visit clients in a territory.” Conway said, “In our new ways of working, we wonder if zoning is even important. What Covid has taught us is to be innovative in the way that we engage with clients.”
In an interview on Bloomberg TV’s The Close, Voya Investment Management CEO Christine Hurtsellers said, “I think we’re starting to see what I would call exuberance in some of the pockets of the U.S. housing market, given how strong home prices are.” Hurtsellers said Voya sees the market as having “all kinds of really great fundamentals; however, really fully priced. So picking your spots and thinking about how the world could change as the Fed becomes more engaged around inflation ultimately, that could certainly bring some issues to bear.” Asked about the “ripple effects” on risk assets of the Fed unwinding its monetary stimulus policy, Hurtsellers said that as inflation becomes not just a “transitory event and becomes a little bit more cyclical, like wage increases stick, it’s going to create some volatility. It could impact the small-cap indexes ... But again, I think you’ve just got to be very careful, you know, in the months to come to not get overly sanguine around easy money, excess liquidity, and that it’s going to go away and that it’s not going to have effects.” Asked “where do you put your money to work” to manage these risks, Hurtsellers said, “Some of our favorite trades as far as both rebound and somewhat of an inflation hedge is commercial real estate ... There are some pretty attractive opportunities, including retail ... (which) can also be a good inflation hedge to the degree that we start to see a tick-up in interest rates.”
In a MarketWatch podcast for Barron’s Live, Voya Investment Management Head of Multi-Asset Design Amit Sinha said Voya “offers health, wealth, and investment management solutions” using “investment strategies that meet specific outcomes that an investor desires.” Sinha said Voya looks at “all available investment opportunities ... in order to design portfolios that meet what an investor needs ... For individuals, we manage target-date funds that help with saving for retirement, and we also manage investment strategies that support an individual’s spending once they are in retirement.” Sinha added, “When it comes to something so critical as retirement, it’s very personal and emotional. So my thinking has evolved towards having a greater appreciation that people have different concerns than just beating the market.”
Financial Advisor Magazine reports financial advisors see “lots of potential for continued growth” in the U.S. economy, “assisted by the economic stimulus package.” However, “the tax increases that are being proposed could have a negative impact on mid- and small-sized companies and, therefore, on investors, said Paul Zemsky, chief investment officer of multi-asset strategies and solutions at Voya Financial.” Zemsky “said he sees some potential for bad news, along with the increasing economic growth and overall good performance of the stock market. Long-term joblessness and weak labor force participation will remain major concerns and ‘are the main reason the Fed is holding its dovish posture,’ he said.” Zemsky noted the impact of any proposed tax increases “depends on what gets through Congress,” but said hikes in capital gains and corporate income taxes “will make business activities less profitable for investors and for corporations.” However, Zemsky explained, “I still expect to see record investment and business profits for the rest of the year. If equities become less profitable, we may see a shift to bonds” despite low rates. Zemsky added, “Right now, advisors should tell their clients not to overreact. The proposals that are being discussed are trial balloons and might not come to pass.”
