New York, NY, USA — Continued uncertainty relating to the Russia-Ukraine conflict had an undeniable impact on the investment climate during the past week, causing volatility in the market, says Jason Colodne, co-founder of Colbeck Capital Management, an NYC-based private equity asset management organization focused on strategic lending.
Here’s a look at some of the week’s most notable economic and investment news.
Economic Snapshot
On Monday, a Federal Reserve statistical release revealed the total amount of outstanding consumer credit, which encompasses student and auto loans and revolving debt, had increased at a seasonally adjusted annual rate of 1.9% in January.
Revolving credit, which had risen 4.9% in December and 24.8% in November, decreased by 0.3% last month. Nonrevolving credit — which includes motor vehicle and all other loans not included in revolving credit, such as educational, boat and vacation-related loans — was 2.5% higher in January.
Thursday’s consumer price index release revealed that, driven in part by food and rent costs, prices rose at the fastest pace in 40 years, escalating 7.9% for the 12 months ending in February.
The food index also increased by 7.9%, its biggest 12-month rise since the period ending in July 1981, according to the Bureau of Labor Statistics. In February, the consumer price index showed a monthly increase of 0.8% from January. The index rose 0.6% during the first month of the year.
Recent Market Activity
The stock market felt the brunt of still-unfolding news from Eastern Europe throughout the week. Despite a brief midweek respite, the market experienced more declines after the Thursday morning release of new consumer price inflation data.
The S&P 500 dropped 3% on Monday, its most pronounced one-day decline since October 2020. However, after falling 0.7% on Tuesday, the index rose 2.6% on Wednesday. Yet by Thursday, the S&P was again on the decline, shedding 2.4%. Initial closing results on Friday indicated the index had fallen 1.3% for the day.
On Monday, the Nasdaq Composite Index declined 3.6%. As The New York Times noted last week, the index is 20% shy of the record high point it reached in November and appears to be entering a bear market, which can signify a serious downturn. The index also lost 0.3% on Tuesday. While the index was up 3.6% on Wednesday, by the end of the day on Thursday, it had lost 0.9%. The Nasdaq also fell on Friday, tumbling 2.2%, according to early estimates.
The Dow Jones Industrial Average was down 2.4% by the end of the day on Monday, and on Tuesday declined 0.6%. Following a 2% gain on Wednesday, the Dow fell 0.3% on Thursday. Late Friday afternoon, the Dow’s daily performance appeared to be a 0.7% loss for the day.
The 10-year Treasury yield reached 2% at its highest point on Friday; the 30-year Treasury bond — which had increased to 1.777% on Monday — showed a 1-basis-point decline at around 4 p.m. ET on Friday, hovering at 2.39%.
As time passes, the effect that the buildup to the current Ukraine-Russia conflict had on various investment areas in recent months — including the leveraged loan market — is becoming clearer. According to a recently published update from the Loan Syndications and Trading Association, loans outperformed high-yield bonds and equities for a second month in a row last month — yet the S&P/LSTA Leveraged Loan Index experienced its biggest loss in nearly two years, declining 0.51%.
In January, according to the report, new-issue volume reached $72.8 billion; last month, overall activity was significantly less, totaling $24.7 billion.
About Jason Colodne
Jason Colodne is the senior transaction partner at Colbeck Capital Management and oversees all aspects of investment execution and portfolio management. Colodne co-founded Colbeck Capital Management as a managing partner in 2009. Colodne’s investment experience spans over two decades.
About Colbeck Capital Management
Colbeck Capital Management is a leading, middle-market private credit manager focused on strategic lending. Colbeck partners with companies during periods of transition, providing creative capital solutions. Colbeck sponsors its portfolio companies through consistent engagement with management teams in areas such as finance, capital markets and growth strategies, distinguishing itself from traditional lenders. Founded in 2009 by Jason Colodne and Jason Beckman, the principals have extensive experience investing through different market cycles at leading institutions, including Goldman Sachs and Morgan Stanley.
Company: Colbeck Capital Management
Name: Jason Colodne
Email: info@colbeck.com
Website: https://www.jasoncolodne.com/
Address: 888 7TH AVENUE, 29TH FLOOR NEW YORK, NY 10106
