The coronavirus outbreak has affected global supply chains, consumer demand and interest rates. In response, we’re downgrading Financials and upgrading Utilities.
This week’s Fed rate cut helped steady financial markets reeling from the expected impact of the coronavirus on the US economy, and we think more cuts are coming—in March and beyond. The economy should rebound in the second half of the year, though at a lower full-year pace.
As European Central Bank (ECB) policymakers adjust the budget to reflect lighter eurozone economic activity, moderate economic growth and the United Kingdom’s departure from the European Union (EU), David Zahn, our Head of European Fixed Income, shares his macroeconomic outlook for the region. He weighs in on why the ECB could remain accommodative.
Despite lower prices and higher relative yields, there’s room for prices of high-yield bonds, preferred securities and bank loans to fall further.
What impact will coronavirus and market volatility have on your portfolio?
After recent sharp declines, US stock valuations look more attractive, especially compared with bonds. While the current volatility is unsettling, heightened uncertainty over earnings because of the coronavirus crisis could create opportunities for long-term investors who distinguish between winners and losers from the shock.
Our outlook for interest rates, assessed through our investing framework of cycle, valuation and sentiment.
Sonal Desai, PH.D., is executive vice president and chief investment officer of Franklin Templeton Fixed Income, as well a portfolio manager for a number of strategies. In this interview, she discusses the unique investment strategy she has developed, as well as the key risks – specifically the coronavirus – facing investors.
Many questions – and few answers – surround the coronavirus epidemic and its implications for financial markets. Read Howard Marks’s latest memo, in which he shares his own questions, guesses, observations and inferences to help make sense of the potential impact of the virus on global economies and markets.
The Fed could give the economy a powerful boost by maintaining the mix of assets on its balance sheet.
In a surprise move, the Federal Reserve on Tuesday lowered the target range for the federal funds rate, its key benchmark interest rate, by 50 basis points,or half a percentage point, to a new range of 1% to 1.25%. The reasoning behind the move was concern about the “evolving risks” to the economy posed by the coronavirus.
Equities have fallen on continued news of the virus’ spread, and bonds have rallied as investors seek safety.
Margaret Farquharson is a senior director with the Nationwide Funds Group and leads its exchange traded fund business, where she has oversight for all aspects of the business including product development, product management, marketing, distribution, and operations.
In January, we highlighted signs of green shoots in economic data—learn how recent developments affect our outlook.
With the markets shell shocked by of the worst weeks on record, analysts are split on whether investors are simply overreacting to the coronavirus epidemic or if we are confronting an actual existential threat to the global economy.
Bob Browne is the chief investment officer of Northern Trust Asset Management, which has more than $900 billion in assets. He chairs the firm's investment policy committee, which sets investment policy for all Northern Trust groups. In this interview, he discusses his views on the global economy and markets.
Although there were good reasons to question whether GDP growth would accelerate in the first quarter, there were also good reasons why I expected the rate of growth to improve before mid year.
Commodities look oversold right now, meaning there could be some potentially attractive buying opportunities. Brent crude oil, the global benchmark, traded below $50 per barrel on Friday for the first time since July 2017, while copper remained mostly range-bound.
human lives has indeed been unnerving and regrettable. However, fear can lead investors to make irrational choices. We acknowledge that the virus is a global growth risk, and the situation will probably get worse before it gets better. But we suggest focusing on fundamentals and distinguishing between short-term tumult and long-term impact.
Limited supply and high demand for high-yield municipal bonds may adversely impact an investor’s financial position. Plan now for potential client conversations about exposure to lower quality tax-exempt securities.
Municipals ended last year with their lowest yields on record, so the 2020s are likely to be challenging. BBH’s Head of Tax-Exempt Portfolio Management, Greg Steier, will explain the rising fundamental risks associated with historically expensive valuations and the dangers in owning generic, market-like municipal portfolios. Join us for this in-depth discussion that will cover:
While the passive balanced portfolio (60% stock/40% bond) has outperformed more diversified allocations over the last decade, we believe investors should temper their expectations for a repeat. Two key problems lie ahead for such a portfolio.
I don’t know about you, but I never thought I’d see the day when the yield on the 30-year Treasury bond dipped below 2 percent, let alone 1.8 percent.
How contained is the coronavirus outbreak? That’s the question that rattled markets on Monday, sending the Dow industrials down more than 1,000 points, or 3.6%. The S&P 500 index declined by 3.4%.
Gold mining stocks have broken out, with several hitting new 52-week highs this week. Gold royalty and streaming companies, including Franco-Nevada and Wheaton Precious Metals, also hit fresh 52-week highs.
The coronavirus outbreak and the Democratic primary have affected sector leadership. However, we’re keeping our sector views unchanged—for now.
This week’s breakout in gold is an epic expression of our times in which potential economic problems are quickly followed by massive actual and expected responses by central banks and governments. The problem de jour (for both markets and the public) is of course the real and scary health and economic consequences of a further spread COVID-19.
While there are a number of uncertainties in the global economy today, many investors may not realize the depth and breadth of potential opportunities emerging markets still offer—on both the equity and fixed income side.
It’s time for our monthly look at market risk factors. We had a strong start to the year, with U.S. markets at all-time highs by mid-January. But a risk-off sentiment driven by the spread of the coronavirus from China spooked investors, leading to modest declines for equity markets at month-end.
The cognitive dissonance in the credit market is stunning. I recently have had the feeling that I’m living peaceably in Britain during the 1930s while on the continent the Germans were building weapons, expanding their army and navy, and opportunistically grabbing land.
With all the attention that is paid to macroeconomic variables and forecasted growth, it’s vitally important to understand the role that the economy plays in portfolio returns – in particular, the returns of the value, beta and size factors.
So far in 2020, the yield on the 10-year Treasury has averaged 0.01 percent when adjusted for inflation. Since the end of January, it’s actually dipped below 0 percent, trading as low as negative 0.14 percent on January 31.
Although stocks rebounded after a sharp drop in January, the market’s reaction to the coronavirus outbreak highlighted stock vulnerabilities.
Kenneth Leech, Chief Investment Officer at Western Asset Management, takes a deep dive into what he views as key market drivers throughout 2020 as well as his current view on various sectors within the bond markets.
A review of last month’s market-moving events across countries and asset classes.
As Russ explains, bond yields may be low, but are still critical as an insurance policy against equity risk.
Research Affiliates examines how different asset classes perform across full market cycles, and discusses how macro forecasts inform its investment strategies.
Mike LaBella takes a deep dive into the state of the U.S. equity markets and why investors should be paying attention to dividend paying equities that have attractive valuations and sustainable high yields.
CLSA predicts that the price of gold will beat the S&P 500 in 2020. The Hong Kong investment firm has an impressive track record when it comes to making market predictions—last year it had a 70 percent hit rate—so it may be prudent to take this one seriously.
A deep dive into the factors that brought inflation down and are keeping it low.
Overcomplicating things is seldom on the path to investment success. The stunning ascension of Tesla has confounded, in a manner no less than stupefying, the investment thesis of many.
Regular readers of this blog and of our other commentary know that we have been looking for some kind of cyclical rebound in economic activity starting in the first quarter of 2020.
Pricing dislocations in Europe, performance dispersion across the credit spectrum and shifts in the political landscape should likely provide abundant opportunities for select hedge strategies in the year ahead, according to K2 Advisors. The team shares some macro themes and questions its focused on, and shares its outlook for various hedge strategies.
It is probably hard to remember after a week or so of coronavirus fears, but during Q4 2019, “risk” assets once again outperformed “haven” assets. This was after two quarters of “haven” asset outperformance.
Quantitative Easing (QE) policies in developed countries triggered a flight from yield in EM as investors pursued capital gains in developed markets instead. As the capital gains in developed markets fade and with yield nowhere to be found, a search for yield in EM has finally begun.
Although European equities performed well in 2019, there’s still a significant value and performance gap compared to US stocks, according to Franklin Mutual Series Portfolio Manager Katrina Dudley. Here, she gives reasons why she’s optimistic about the backdrop for European value stocks and discusses some potential market-moving events she’s monitoring.
Unlike the weather, where predicting over the long term has much more error than predicting for tomorrow, we have a better idea of probable outcomes for how markets will perform in the 2020s than how they will do in 2020.
With U.S. growth anticipated to be moderate this year, little was expected in the way of fiscal policy (taxes, government spending) and monetary policy (short-term interest rates), but life comes at you fast.
Late-cycle markets can unnerve high-income investors. But we see ways to generate a healthy level of income while potentially decreasing overall portfolio volatility.
On Wednesday, the Federal Reserve concluded their January “FOMC” meeting and released their statement. Overall, there was not much to get excited about, as it was virtually the same statement they released at the last meeting. However, Jerome Powell made a comment which caught our attention...
