Lynn Noah

The three US equity indices that we review in this weekly series fell from December 8 to December 15, 2015, after a rebound in oil prices.

The US Treasury holds monthly auctions of three-year Treasury notes. The latest auction was held on July 7.

On July 8, ten-year Treasury notes worth $21 billion were auctioned—the same as the previous week.

Last week, high-grade bond yields rose after upbeat US inflation and retail sales data raised the possibility of a rate hike by the year’s end.

The issuance of US leveraged loans fell to zero last week. However, in the previous week, ~$4.9 billion in dollar-denominated senior loans were priced.

Investor flows in high-yield bond funds were negative last week. According to Lipper, the net outflows from high-yield bond funds totaled $0.5 billion.

An indirect and wholly owned subsidiary of Clear Channel Outdoor Holdings, Clear Channel International issued $225 million in dollar-denominated junk bonds.

In a press conference on June 14 on its annual Article Four Staff Report, the IMF provided a positive assessment of China’s economy.

Last week, AstraZeneca issued A2/A rated high-grade bonds worth $6.0 billion to fund the acquisition of ZS Pharma (ZSPH).

The financial sector is the largest sectoral component of all four mutual funds. So how the sector performs will have a major impact on the returns of these funds.

China’s Leading Economic Index currently indicates that the country’s economy is facing a downturn. Its LEI remained unchanged at 98.71 points in July 2015.

Hedge fund managers have expressed mixed opinions about the Chinese economy. China’s total debt-to-GDP ratio is currently in the range of 240%–270%, compared to 150% a decade ago.

MDC Partners (MDCA) offers marketing and communication network services. It issued dollar-denominated junk bonds worth $900 million on March 18.

Flows into investment-grade bond funds were negative for the week ended August 26, making it the fifth successive week of outflows. It was the largest outflow of 2015 so far.

High yield bond issuance surged last week and hit its highest level in 2016 yet due to continued growth in volume.

The US Treasury introduced two-year floating rate notes (or FRNs) in January 2014.

Investment-grade corporate bonds worth $28.8 billion were issued in the primary market in the week to May 27, 2016.

The SSE Composite Index rose after the US Federal Reserve decided to raise the interest rate by 25 basis points. From December 9–16, 2015, the index rose 1.3% and closed at 3,516.2 points on December 16.

Last week brought the total US dollar-denominated issuance of high-yield debt to $24.3 billion in 2016 YTD. It’s 71.0% lower than the same period in 2015.

Bond prices fall when interest rate rise. So when interest rate rises, the value of a bond or a bond portfolio falls.

Investment-grade bond issuance fell to $26.275 billion last week as compared to $32.35 billion in the previous week.

High yield bond issuance activity gained traction last week on improved Market sentiment. The total US dollar-denominated issuance of high yield debt is $60.8 billion in 2016 YTD.

The PCE price index is the Federal Reserve’s preferred measure of inflation because it covers the broadest set of goods and services.

According to data from Lipper, leveraged loan funds saw an inflow for the second consecutive week. The quantum of inflows came in at $176 million last week.

Overall, $13 billion worth of floating-rate notes were auctioned, the same as in February’s auction.

According to S&P Capital IQ Leveraged Commentary & Data, three collateralized loan obligation deals worth $1.4 billion were priced last week.

According to the People’s Bank of China, new loans issued by Chinese banks rose to 985.5 billion yuan ($150 billion) in May from 555.6 billion yuan ($85.2 billion) in the previous month.

Risk-adjusted returns is a concept that can be used to determine how much return an investment can provide with the given level of risk associated with it.

China’s MNI Business Sentiment Indicator expanded to 50.5 in April due to stimulus measures from Chinese authorities to boost economic growth.

The overall demand fell for the seven-year T-notes auction because the FOMC meeting didn’t give any clarity regarding an interest rate hike in the future.

The US Department of the Treasury’s 26-week Treasury bill, or T-bill, auction, totaled $26 billion last week.

According to data from Lipper, leveraged loan funds saw outflows for the third consecutive week. The quantum of outflows came in at $73 million last week.

High-yield bond issuance activity increased significantly last week on a firm market condition. Issuers were in a rush to close deals ahead of Memorial Day weekend.

The Fidelity China Region Fund Class C (FHKCX) aims to achieve long-term capital growth.

In February, China’s CPI (consumer price index) rose 2.5% YoY—the largest rise since July 2014. It was also higher than the 1.8% YoY rise in January.

China’s aggregate financing also fell sharply from 3417.3 billion yuan ($525 billion) in January to 780.2 billion yuan ($120 billion) in February.

Flows into investment-grade bond funds were negative for the week ended August 21, making it the fourth successive week of outflows. The funds saw net outflows of $1.09 billion.

China’s aggregate financing dropped to 751.0 billion yuan ($115.2 billion) in April from 2.3 trillion yuan ($361 billion) in March.

The SSE Composite Index fell by 1.8% from December 2 to December 9 and closed at 3,472.44 on December 9, 2015.

High-yield bond issuance surged last week and recorded its highest level in 2016 due to improved primary market sentiment.

According to the latest SWIFT RMB Tracker, the yuan—also known as the “renminbi”—accounted for 2.3% of the global payments in November 2015.

According to Lipper fund flows data, investment-grade bond funds saw net outflows of $517.5 million in 1Q16.

We think that 2016 will be challenging for the Chinese economy. With policy support and improved credit conditions, economic activity stabilized in 1Q16.

The US Department of the Treasury introduced two-year FRNs (floating rate notes) in January 2014. An FRN is a debt security. Its interest payment varies.

Last week brought the total US dollar-denominated issuance of high-yield debt to $66.5 billion in 2016 YTD—47.0% lower than the same period in 2015.

Treasury yields fell across the yield curve last week after the US Department of Labor reported that the economy added fewer jobs in April.

With the US economy gearing itself up for the another rate hike, investors are investing in short-term Treasury securities whose price will fall less in value when interest rates rise.

For the month ending on November 30, 2015, TCWAX fell by 2.8% due to weakness in global demand and lower commodity prices.

Flows into investment-grade bond funds were positive last week. Investment-grade bond funds saw net inflows of $907.1 million during the week ending July 6.

Leveraged loan funds saw inflows in the week ending March 9 after 32 consecutive weeks of outflows. However, the amount of inflows was small at $55.0 million last week.

With the Brexit fallout, the Federal Reserve will most likely delay the next interest rate hike until the end of this year or even next year.

Flows into investment-grade bond funds were positive for the week ending on October 14 after witnessing four consecutive weeks of outflows.

China’s service sector expanded at a moderate pace in March. The Caixin China General Services Business Activity Index beat the neutral value of 50 to come in at 51.3 in March.

Stocks from the financial sector form the biggest chunk of both funds. These stocks make up 33.9% of CHNIX, while forming 23.8% of the MCHFX.

The SSE Composite Index fell 1.0% to 2,807.51 from May 11 to May 18, 2016, after the minutes of the Federal Reserve’s April policy meeting hinted that a rate hike might happen in June.

China’s manufacturing sector has been plagued by weak demand, rising labor costs, overcapacity in industries, and tighter resource and environmental constraints.

According to Lipper Fund Flow data, investment-grade bond funds saw net outflows of $1.2 billion during the week ended January 27, 2016.

According to data from Lipper, leveraged loan funds saw an outflow for the fourth consecutive week. The quantum of outflows was $93 million last week.

The US leveraged loans market saw an allocation of $4.75 billion worth of dollar-denominated senior loans in the week to April 29.

According to Lipper’s funds flow data, investment-grade bond funds saw net outflows of $789.1 million up to the week ending November 25.

The Templeton China World Fund – Class A (TCWAX) is the third-largest fund under this review, with an asset size of $297.2 million as of January 2016.

Mark Yusko has been bullish on China for a long time. He thinks that although China’s GDP declined, it’s still at a much higher level than other countries.

Market demand for two-year floating rate notes in September fell sharply to 24.7% of the accepted competitive bids—its lowest mark ever—compared to 43.6% at August’s auction.

Investor flows into high-yield bond funds were positive for the fifth week. Net inflows into high-yield bond funds totaled $1.7 billion in the week ending March 16.

Investor flows into high-yield bond funds were negative last week. According to Lipper, net outflows from high-yield bond funds totaled $1.8 billion.

The flows into investment-grade bond funds were positive for the week ending November 18. Investment-grade bond funds saw net inflows of $945.0 million.

The rise in new yuan loans doesn’t directly impact the overall performance of mutual funds. But with the rise in credit flow in the economy, mutual funds with large exposures to financials benefit.

For the week ended November 25, investment-grade bond funds saw net outflows of $1.46 billion after witnessing two consecutive weeks of inflows.

Leveraged loan funds saw an outflow for the week ending November 25. The quantum of outflows was $742.0 million last week—up from $306.2 million in the previous week.

China’s shifting its focus from a manufacturing-based economy to a consumer-based economy. It’s expected to do well in the long run.

Hanesbrands issued Ba2/BB rated dollar-denominated junk bonds worth $1.8 billion on May 3. It will use the proceeds of the loan for refinancing purposes.

Let’s look at the high yield bond markets. Junk bond issuers stayed away from the primary market for three successive weeks in December due to holidays.

According to data from Lipper, leveraged loan funds saw an inflow for the third consecutive week. The inflows came totaled $126 million last week.

Walgreens Boots Alliance (WBA) issued Baa2/BBB rated high-grade bonds worth $6.0 billion through five parts on May 26.

Continuous improvement in market conditions resulted in the highest year-to-date (or YTD) high-yield bond issuance in the primary market last week.

Collateralized loan obligation (or CLO) deals worth $451 million were priced last week. Year-to-date CLO issuance stands at $7.1 billion.

High-yield bond issuance fell to zero last week due to two main reasons. Junk bond issuers stayed away from the primary market due to fears of default risk.

It’s expected that the Fed may increase the interest rate soon, and 30-year Treasury bonds auction are closely watched by stock and bond investors.

Leveraged loan funds saw an outflow in the week ending February 3. It’s the fifth successive week in 2016. The quantum of outflows was $405.0 million last week.

The US Treasury auctioned 30-year TIPS (VIPSX)(LTPZ) worth $5 billion on June 22.

The Fidelity China Region Fund Class C (FHKCX) and the John Hancock Greater China Opportunities Fund Class A (JCOAX) benchmark their performance to the MSCI Golden Dragon Index.

The three US stock indexes that we review in this weekly series rose from July 5–12, 2016. Robust US jobs data boosted investor sentiment and eased the fear of an economic slowdown.

Prime Security Services is a subsidiary of Apollo Global Management (APO). It issued junk bonds worth $3.14 billion on April 20.

US corporates were the highest issuers of high-grade bonds in August 2015, making up 35.4% of all issues. Yankee bond issuers came in second.

A lower cost of borrowing and tighter spreads have attracted foreign banks to flock to the US corporate debt market.

Visa Inc (V) issued A1/A+ rated high-grade bonds worth $16.0 billion via six parts. This included $1.75 billion in 1.20% two-year notes at a spread of 30 bps.

China’s State Administration of Foreign Exchange, or SAFE, released foreign reserve data for March on April 7, 2016. China’s foreign reserves rose $10.3 billion to $3.2 trillion in March.

The three US equity stock indexes we review in this weekly series were mostly flat from August 11–18, 2016. This came after the minutes from the July 26–27 FOMC meeting.

The Caixin Composite Output Index stood at 49.9 in October—slightly below the neutral 50.0 value—up from 48.0 in September.

The total US dollar-denominated issuance of high-yield debt stands at $56.9 billion YTD in 2016—29% lower compared to the same period in 2015.

In an attempt to prop up its slowing economy, on October 23, the PBoC cut its one-year benchmark bank lending rate by 25 basis points to 4.35%.

Among the US stock indices we review in this weekly series, two US equity indices rose while one equity index fell between December 23 to December 30, 2015.

Three US equity indexes—the S&P 500, the Dow Jones Industrial Average, and the NASDAQ—fell from January 12 to January 19 as the oil price rout continued.

The US Treasury auctioned five-year TIPS worth $14 billion on August 18. The overall demand for the securities fell 2.1% from the previous auction.

According to Lipper, in the week ended August 10, 2016, leveraged loan funds saw inflows of $96.4 million. In the previous week, inflows were $60.4 million.

According to Lipper funds flow data, investment-grade bond funds saw net inflows of $2.52 billion during the week ending August 10.

China’s State Council approved the long-awaited Shenzhen-Hong Kong Stock Exchange Link on August 16, 2016. The Shenzhen Composite Index gained 3.2% from August 12 to August 16.

Westpac Banking Corporation (WBK) issued Aa2/AA- rated high-grade bonds worth $5.0 billion via five parts on August 11, 2016.

The SSE Composite Index rose by 1.4% to 3,002.64 from August 3 to August 10. The Chinese government bond yield fell after the decline in global bond yields.

In the week ended August 3, 2016, leveraged loan funds saw inflows worth $60.4 million. In the previous week, leveraged loan funds had outflows of $15 million.