Led by improvements in production-related indicators, the Chicago Fed National Activity Index (or CFNAI) rose to +0.27 in July from +0.05 in June.
The global hunt for returns has turned US junk bonds into an attractive investment option.
A lower cost of borrowing and tighter spreads have attracted foreign banks to flock to the US corporate debt market.
Despite better-than-expected US jobs data, Mohamed El-Erian doesn’t see a rate hike in the September policy meeting.
Emerging markets have been outperformers so far in 2016, with stocks returning 12%. Of that, 10% can be attributed to multiple expansion.
As with any investment in the emerging markets, investors must balance the additional yield which can be achieved with emerging markets bonds with incremental risks.
Between Jan 2014 and September 2015, the break-even rate was higher than the CPI inflation rate, as markets were surprised by the sudden dip in oil (USO) prices.
The break-even rate is the difference between the yields of ten-year Treasuries (IEF) (TLH) and ten-year TIPS (VTIP).
TIPS (TIP) are one one of the few securities that actually pay you directly for inflation. Unlike regular bonds that see an erosion in value when inflation rates rise, TIPS outperform.
The defensive sectors appear more expensive than they have been in the past, as well as more expensive than cyclical sectors.
Yields remain at unattractive levels. This has caused yield-thirsty investors to flock to high-dividend-yielding stocks, driving their valuations higher.
Investment-grade corporate bonds are debt instruments rated BBB- and above by rating major Standard & Poor’s.
The spread between high-yield bonds and ten-year Treasuries was high over the past three years, enough to lure investors to corporate bonds and away from equities.
Robert S. Kaplan of the Federal Reserve Bank of Dallas said, “The U.S. economy is strong enough to justify an interest-rate hike in the ‘not too distant future,’ but increases will be very gradual.”
We think that 2016 will be challenging for the Chinese economy. With policy support and improved credit conditions, economic activity stabilized in 1Q16.
Hedge fund managers had mixed opinions about China at the SALT (SkyBridge Alternatives) Conference. The conference ended on May 13.
Hedge fund managers such as John Burbank of Passport Capital and Michael Novogratz of Fortress Investment Group LLC turned bearish on China this year.
During the last few years, return dispersions within asset classes have been dramatic.
Q. What are some of the common mistakes you see investors make?
A panel discussion with the OppenheimerFunds Global Equity team regarding their approach to investing in an integrated, global economy.