Will the Rally in Small-Cap Stocks Likely Continue in 2017?
Another factor that impacts small-cap stocks’ performance is the yield curve. The yield curve has remained on the flatter side since the recession.
Small caps strengthened throughout the year due to expectations of fewer rate hikes in 2016 by the Fed. The markets expected more rate hikes.
The Restaurant ETF (BITE) is the only ETF that invests exclusively in restaurant stocks. The top ten holdings of BITE currently make up ~30.0% of the ETF.
Investors looking for opportunities in fallen angel bonds can look at the VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL).
Hungary’s credit upgrades to “investment-grade” (FLTR) opened doors for investors tracking low-risk benchmarks.
Although Hungary and Turkey credit spreads were at similar levels and generally moved together through 2014, these spreads began to diverge in early 2015.
The Turkish lira plunged to record lows against the dollar following its downgrade by Moody’s and S&P, who cited increased political instability as well as geopolitical stresses and turbulence.
In recent years, emerging market (EMLC) (HYEM) ratings have improved considerably due to the strengthening macroeconomic framework as well as years of reforms.
Growth in emerging market (EMLC) (HYEM) and developing economies is projected to increase from 4% in 2015—the lowest since the 2008–09 financial crisis—to 4.3% and 4.7%…
Strong Local Currency Performance As Rates Remain Steady Returns in the emerging markets debt space have so far in 2016 ranked commensurately with risk. More specifically, local debt has been…
As the chart above shows, flows into emerging markets funds remained positive but diminished considerably from July and August.
Strong investor interest in emerging market debt (EMLC) (HYEM) has continued despite adverse political and economic issues in some countries.
Negative bond yields in Japan and the Eurozone, coupled with very low federal funds rates in the United States, are part of why emerging market bonds and currencies have performed so well in 2016.
Emerging market (or EM) debt (EMLC)(HYEM) has, over the last several years, struggled as an asset class.
It’s important to consider the REER case studies for the Mexican peso and the US dollar….
In the current market environment, duration risk has risen across bond markets (BND) (LQD). When interest rates rise, bonds with a higher duration will likely be affected more.
All countries have suffered from yield increases, and monetary policy is turning less accommodative, even in Japan and the European Union.
The ten-year Treasury note, which rose in price in the first half of 2016 and pushed the yield down to 1.4%, has started selling off in the second half of the year.
Emerging market economies have seen improved GDP growth in 2016, while developed markets are struggling to grow.
REITs (IYR)(VNQ) are known for their high dividend yields, outclassing almost all other broad market indices.