NEAM Insights

During his Senate confirmation hearing, Federal Reserve Chair nominee Kevin Warsh called for “regime change” at the Fed to restore its credibility. The June 17 FOMC meeting gave markets a first glimpse of what that could look like: a more hawkish tone, a renewed focus on the inflation mandate, and a decisive step away from the forward-guidance-heavy playbook of the post-financial-crisis era. In this new regime, investors may receive fewer signals from the Fed, leaving markets more vulnerable to sharp reactions when key economic data or policy pronouncements surprise. Read More

May Overview Fed minutes from the last FOMC meeting highlighted a shifting policy tendency of the committee, from one with an “easing bias” to a more balanced two-way outlook for future interest rate decisions to account for persistently elevated inflation. While participants generally saw a potentially longer holding pattern until more certainty emerged on the economic implications from the Middle East conflict, the minutes shared that “many participants” would have favored a statement that removed an easing bias regarding future policy decisions. Read More

Private credit’s rapid expansion has prompted echoes of the subprime lending boom, raising the question of whether another financial stress event could follow. While the comparison is useful given the similarities in borrower weakness, leverage, and limited transparency, it should not be overstated. Private credit appears vulnerable to credit losses and repricing, but lacks the degree of interconnectedness, short-term funding dependence, and transmission into the banking system that made subprime mortgages systemically destructive. In the end, private credit is a market that may prove painful for some investors and borrowers, but it is less likely to trigger a broad financial shock. Read More

April Overview Minutes from the Fed’s March meeting provided insight into potential outcomes at the April meeting. At the time of the March meeting, the committee felt that risks to both the inflation and employment sides of its mandate were “elevated,” with conflict in the Middle East magnifying these challenges. Read More

Executive Summary Products of property-focused insurers tend to have attritional and catastrophic loss claims that materialize and settle over a relatively short time-period once a loss-event occurs. In contrast, incurred losses related to casualty-focused insurance products may take several years to fully materialize and settle. We focus on commercial property insurers and commercial casualty insurers to see if their respective underwriting focus corresponds to any differences in their respective investment strategies.1 Our findings identified noteworthy characteristics that distinguished the investment portfolios of these carrier types from 2015 to 2024. Property insurers produced strong investment yields, but slower surplus growth relative to their casualty counterparts. Casualty insurers had more conservative asset allocations compared to property insurers. Historically, casualty insurers maintained longer duration portfolios relative to property insurers, but recent data suggests this may no longer be the case. This issue of Perspectives will explore the data behind these findings. Read More

March Overview The Fed held steady at its most recent meeting, keeping its policy rate range at current levels. With the labor market stable but moderating, inflation still above target and geopolitical uncertainty rising, Chair Powell emphasized that future policy decisions would remain data-dependent. The Fed also commented that the economy appears on track, supported by “resilient” consumer spending and increasing business investment. Their median economic estimates showed GDP increasing over the next three years along with higher headline and core inflation. Unemployment projections remained relatively constant, with the rate expected to fall in 2027, albeit to a lesser extent than previously envisioned. Against the backdrop of rising Middle East tensions, uncertainty around these projections increased, particularly with respect to inflation. Despite this uncertainty, the median projection continues to reflect one rate cut in 2026, followed by an additional 25 basis point reduction in 2027. Read More

In today’s market environment, alternatives and private credit dominate the conversation. These products are marketed as innovative, differentiated, and attractive, while core fixed income is often dismissed as boring, commoditized, or merely a portfolio requirement. For some market participants, core bonds have become an afterthought, something to hold because investment policy requires it. That framing is misguided. Core fixed income does not have to be plain vanilla. When managed actively, thoughtfully, and with discipline, core fixed income can be a durable source of compounded alpha and true value creation over time. Read More

February Overview With stabilizing employment data and “somewhat elevated” inflation, the Fed held rates steady at its last meeting. The minutes from the meeting highlighted a range of views amongst participants. The “vast majority” of Fed officials thought that downside risks to employment had moderated and wanted to see more progress on the inflation front before considering further rate cuts. Two Fed governors dissented from the decision and supported another rate cut. However, “several” not only backed the decision to leave the Fed funds rate unchanged but would have preferred a more balanced statement that alluded to the possibility of future rate hikes as well as cuts. With the risks to the dual mandate seemingly moving back into balance, incoming data appears set to drive future Fed decisions. A change in Fed chair, subject to Senate confirmation, injects some added uncertainty into potential Fed decisions, though. Read More

Executive Summary Correlation statistics are measures commonly used to evaluate the relationship between two variables. Asset classes often exhibit different performance tendencies over time. During market rallies or drawdowns some assets may outperform each other in different ways. These relationships can help reduce volatility across market cycles for diversified investment portfolios. This is also the case for the various types of insurance products sold by U.S. Property and Casualty insurance companies, which often have divergent claims development and loss cost characteristics over time. Moreover, assets and liabilities for P&C insurers usually do not behave in a uniform way, supporting diversification at the enterprise level as well. Read More

January Overview As the labor market stabilizes even while inflation remains above target, the Fed’s decision to keep the benchmark rate at 3.5%-3.75% reflects the Committee’s preference to wait for additional economic data before taking further action. Noting that the unemployment rate is steadying and payroll additions remain low, while upgrading the language related to the pace of growth to “solid” from “moderating,” the Fed still highlighted that inflation remains above their target. When viewed in the aggregate, the data led the Committee to decide to hold rates at their current levels until a clearer picture of the path of employment and inflation emerges. Read More