Market Comment - March 16, 2023
The latest market distress has been about asset / liability management by professional fiduciaries of investor capital. These ALM challenges have been bought about by higher interest rates and declining valuations impacting the deposit base for the venture and early-stage industries such as technology, and life sciences.
As the higher risk-free rate raises the bar for expected investment performance to deliver returns to investors, there will likely be continued declines in valuations of other asset classes that are not traditionally marked to market such as private equity. This will put more stress on the financial system, but also may lead to more systemic credit distress beyond ALM management issues.
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