Uncertainty Now: What to Expect in Global Markets
We can also expect some risk-off events based on the policy decisions of the Bank of Japan, which is also undergoing a quantitative easing program.
Risk aversion is on the rise again as investors begin to question President Trump’s trade policies and as we’ve begun to see changes in asset allocations.
Equity markets trended lower after the Fed’s March meeting minutes were reported. In the minutes, some FOMC members sound concerned about the rise in equities.
How Different Asset Classes Are Performing
VanEck VAN ECK: In fixed income, investors have to deal with this more volatile environment, and we see four different ways they can go with it: Number one, you can…
VanEck JAN VAN ECK: U.S. equities were affected because corporate earnings turned positive only when energy companies started recovering in the third quarter. In fixed income, high yield improved after…
According to Morgan Stanley, US high yield bonds (IGHG) (LQDH) generated a return of 14.4% in 2016.
EWU Rises as Bank of England Holds Firm on Interest Rates
The Bank of England’s MPC voted to hold interest rates at 0.5%, which strengthened the pound sterling against the euro and dollar. The EWU rose by 0.89%.
The UK market’s reaction to the ECB’s announcement of its asset-buying plan was reflected in the rise of the iShares MSCI United Kingdom ETF (EWU) on Thursday, September 3.
The UK market experienced a stock rally on Thursday, September 3, over a comment of the ECB Chief Mario Draghi regarding the ECB’s plan to fully implement its asset-buying program.
A Look at the Fund Flows in Low-Volatility ETF SPLV
The anticipated views of the Federal Reserve members are expected to make way for utilities (IDU) (VPU) and for low-volatility funds.
Since July 2016, VPU has experienced net outflows of nearly $320 million.
In VPU, the top ten holdings form nearly 50% of the total portfolio. These holdings include NextEra Energy (NEE), Duke Energy (DUK), and Southern Company (SO).
Brazilian Real Nears All-Time Lows in 2015
The Brazilian real has been trading on a weaker note against the US dollar in the last year after depreciating by more than 40% against the US dollar.
The Brazilian real underwent massive depreciation of 1.89% against the US dollar on September 10 after the country’s credit rating went from “investment-grade” to “junk” status the night before.
A strong dollar has had an adverse impact on emerging market currencies. Monetary policy tightening could also lead to an outflow of capital from emerging economies.