The January Effect

We like positioning our client's portfolios to profit from the January Effect......the opportunity to buy cheap bonds in December and sell them in January.

December is a month with limited liquidity as Institutional accounts and Dealer desks close for the holidays and year end. At the same time, some Issuers try to get their final funding done and retail does year end tax loss swapping (especially this year). The selling pressure from new issues and tax loss swapping often cheapens the market and the illiquidity often exaggerates the price movement.

January is a month where there is very little new issuance as issuers plan their funding needs for the year. At the same time there is an extraordinary amount of bonds that mature. All of this results in lots of demand and no supply.

Give us a call to discuss how we can help.