The Issue at Hand by Madison Investments

The Federal Open Market Committee (FOMC) held the federal funds rate steady at its October meeting, suggesting that more time and “the accumulation of more information” were needed before the Committee could decide its next policy move. While market expectations initially had an October hike penciled in following the Fed’s September rate increase, the tune changed over the course of the month as numerous Fed officials pushed back against that narrative. This came despite inflation continuing to rise, its underlying drivers showing little sign of easing, and affordability remaining on the minds of voters with less than one week until the midterm elections.

In this Market Brief, Chris Aleman and Mike Sanders give their immediate reaction to the policy decision, examine its potential impact on the yield curve, and discuss what the trajectory of rates could mean for bond portfolios in the months ahead.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/market-brief-fed-holds-rates-steadynow-what/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

A bond fund’s benchmark can provide insight into what a portfolio may invest in and the risk and return characteristics it may exhibit. Selecting the right benchmark is often the starting point when allocating a portion of a client’s portfolio to fixed income, but understanding how the portfolio actually compares to that benchmark almost always requires further digging.

In this episode, Chris Aleman and Head of Fixed Income Mike Sanders take a closer look at fixed income benchmarks, including the Bloomberg Aggregate Bond Index, how portfolios may deviate from their benchmarks in pursuit of outperformance, and how advisors can assess whether a portfolio’s risks and return characteristics actually align with a client’s needs.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/benchmark-illusion-when-managers-deviate-from-the-index/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

The Federal Open Market Committee (FOMC) delivered a 25 basis point rate hike at its September meeting, following through on Chairman Warsh’s tough stance on fighting inflation. But if inflation is being driven by forces beyond demand, can higher interest rates actually address those pressures?

In this Market Brief, Chris Aleman and Mike Sanders give their immediate reaction to the policy decision, examine its potential impact on the yield curve, and discuss what the changing rate environment could mean for bond portfolios in the months ahead.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/market-brief-warshs-fed-delivers-rate-hike/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

At any given time, the bonds in a portfolio may have coupon rates above or below current market rates. When interest rates move, clients may question why their bonds have coupons that are lower, sometimes significantly lower, than the market rate. But coupon is only one part of the return equation. The price you pay for a bond, the income it generates, and how its price moves all matter when evaluating its total return.

In this episode, Chris Aleman and Mike Sanders break down the different ways to evaluate a bond’s return, including current yield, yield to maturity (YTM), yield to call (YTC), and yield to worst (YTW). They explain why YTM can provide a more useful apples-to-apples comparison between bonds with different coupons and prices, and why a higher coupon does not always mean a better investment.

They also discuss how fixed income managers think about low- and high- coupon bonds and the role they play in portfolio construction.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/dont-judge-a-bond-by-its-coupon/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

At the Federal Reserve’s annual Jackson Hole Symposium, Chair Kevin Warsh delivered a hawkish speech that reinforced the Fed’s commitment to a hard 2% inflation target and offered further insight into its “reaction function”, or the inputs that could trigger a change in interest rates. With inflation stubbornly above target, and external pricing pressures lingering, markets are increasingly pricing in the possibility that the Fed will raise interest rates.

In this Market Brief, Chris Aleman and Mike Sanders examine what Warsh’s comments and the subsequent market reaction mean for the bond market. They also discuss what the changing outlook and flattening yield curve mean for duration positioning and where investors may find opportunities along the curve.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/market-brief-bond-market-takeaways-from-jackson-hole/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

Private credit was originally developed to finance loans that were too complex, illiquid, or long-term for traditional banks and public bond markets. It filled an important gap by matching those investments with institutional investors, such as pension funds and life insurers, that could commit capital for extended periods.

Over the past decade, however, the asset class has grown dramatically. Increased demand for annuities, broader retail participation, and the search for higher yields have fueled demand well beyond its traditional investor base, raising new questions about liquidity, valuation, underwriting standards, and portfolio risk.

In this episode, Chris Aleman and Bill Ford examine how private credit has evolved, what has changed as the market has grown, and how investors and their advisors can evaluate both the opportunities and the risks. Whether you’re evaluating private credit directly or through insurance products like annuities, you’ll come away with a practical framework for understanding what you own, why it may offer higher yields, and the questions every investor should be asking.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/private-credit-how-early-success-created-todays-risks/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

The recent jump in the 10-Year Treasury has reshaped the fixed income landscape, driving a steeper yield curve and creating new opportunities for bond investors. While many investors point to higher oil prices, the story is far more nuanced. Inflation expectations, Federal Reserve policy, fiscal concerns, and shifting market sentiment are all influencing long-term interest rates, and understanding these dynamics can better prepare you and your clients for what comes next.

In this Market Brief, Chris Aleman and Mike Sanders break down what’s really driving Treasury yields, why it matters for bond allocations, and how to think about yield curve positioning in today’s environment.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/market-brief-whats-really-driving-the-10-year-treasury/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

In fixed income, as in all investing, returns are generated by assuming some level of risk. Selecting a fund manager that outperforms similar managers or a benchmark index can feel satisfying, but how do you know if the level of risk that manager took on to achieve those returns was appropriate for your clients’ objectives?

In this episode, Chris and Mike discuss how advisors can evaluate fixed income managers beyond headline returns. They break down concepts like alpha, beta, tracking error, and information ratio that you can use today to make more informed client portfolio decisions, while offering a practical framework for understanding where a manager’s performance comes from, how much risk was taken to achieve it, and whether that approach fits the role fixed income is intended to play within your clients’ portfolios.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/skill-or-luck-measuring-the-value-of-active-management/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

The Federal Open Market Committee (FOMC) held interest rates steady at their June meeting as inflation remains above the Fed’s target and the labor market continues to show resilience. While the policy decision itself was widely expected, investors were more focused on the outlook and messaging from the first policy meeting of new Chair Kevin Warsh.

In this Market Brief, Chris Aleman and Mike Sanders discuss the key takeaways from the meeting, what advisors should pay closest attention to in the Fed’s updated dot plot, and how to interpret the policy decision and outlook for client portfolios.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/the-warsh-fed-a-new-playbook-for-bond-investors/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

When the Federal Open Market Committee (FOMC) convenes for its June 16-17 meeting, all eyes will be on how new Fed Chair Kevin Warsh communicates policy amid a backdrop of economic and political uncertainty. The ongoing conflict with Iran has pushed energy prices higher, contributing to inflation concerns and largely extinguishing expectations for rate cuts. Meanwhile, a resilient labor market, improving productivity, and continued AI-driven capital expenditures point to a strong economy, at least on paper. And then there’s the media attention on how Warsh will handle political pressures, given how vocal President Trump was about his desire for lower rates during the nomination process.

In this episode, Chris Aleman and Mike Sanders take you beyond the headlines to focus on what actually matters: the Fed’s dual mandate, the economic data driving policy decisions, and the implications for investors. Whether you’re preparing for client conversations or evaluating portfolio positioning, this episode provides a framework for interpreting one of the year’s most closely watched Fed meetings.

Learn more: https://madisoninvestments.com/the-issue-at-hand/

For full disclosures and definitions visit: https://madisoninvestments.com/market-brief-previewing-a-pivotal-fomc-meeting/

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer, and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security and is not investment advice.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.