If we turn back the clock to before the recession, we find that US debt levels weren’t this high, and unconventional programs like quantitative easing helped the economy recover from the Great Recession.
A few days before the US Senate approved its own version of the Tax Cuts and Jobs Act, 137 economists signed an open letter supporting the proposed bill.
Green bonds carry the same risk-return profile as conventional bonds. However, these bonds fund projects focused on energy efficiency, clean water, transportation, biodiversity, and sustainable waste management.
The proposed US tax reform bill, or the Tax Cuts and Jobs Act, received approval from the US Senate on December 2. There was a vote of 51-49 in the Senate.
Throughout this series, we’ll look at potential risks facing markets, and how they could impact global financial markets in the short-to-medium term if they end up materializing.
After three weeks of continuous falls, US bond yields rose in the week of September 10. The benchmark ten-year US Treasury yield (BSV) rose by 10 basis points to 2.20% but remains far from the December 2016 high of 2.64%.
Yellen’s financial outlook remained upbeat, but she pointed to the availability of substantial amounts of capital and liquidity in the banking system as potential vulnerabilities.
Apprehensions over climate change, an emphasis on global pension funds over the integration of ESG in their investments, and new markets will fuel demand for this type of bond.
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.
Gold and oil are good hedges against inflation. While gold usually outperforms, if inflation rates rise along with interest rates, it might gain as much.
A short-term corporate bond offers investors with a lower risk profile to invest in fixed income securities with intermediate or short-term maturities.
The possibility of a 25-basis-point rate hike in December is quite high since Donald Trump was elected president, and the markets are already pricing in a hike.
Treasury yields witnessed a secular rise in October. Except for yield on the one-month Treasury bill, which remained flat month-over-month, all other tenors saw a visible rise in yields.
Ray Dalio doesn’t see abrupt crisis Back in 2007, Ray Dalio’s economic principles template “signaled that we were in a bubble and a debt crisis lay ahead.” However, Dalio doesn’t “see such an abrupt crisis in the immediate future.” He has provided two reasons he holds this belief. “Most economies are near the mid-points of the […]
The December 2015 rate hike was the first since the 2008 global meltdown. Now the Fed is hinting at the first rate hike of the year to come in December 2016.
Many economists agree that the United States needs to shift from a reliance on monetary policy to more fiscal stimulus, but it is not clear that the political stars are aligning to do so…
The uncertain global environment created after the Brexit vote made investors hope for a perpetual low rate environment. The prospect of further easing from central banks in the developed markets has spurred strong demand for government debt.
Analyzing last week’s most significant ETF inflows in the context of our entire ETF universe, we note that investors continued to move capital into emerging markets.
According to the Bloomberg US Treasury Bond Index, US government debt has returned 5.4% in 2016. Global investors are flocking to the US debt market (LQD) (AGG), primarily due to negative yields in Europe and Japan.
Equity markets barely reacted to the Fed’s July policy statement released on July 27, 2016. The S&P 500 index was weighed down by consumer staples and Coca-Cola.
US equity markets have recovered from the declines on Monday, June 27, 2016. But money is flowing into safe havens as investors are remaining cautious.
Alcoa aimed for an investment grade credit rating for its value-add company while maintaining a strong non-investment grade rating for the upstream company.
Investment-grade bond yields rose marginally for the week ending June 17. Corporate bond yields, as measured by the BofA Merrill Lynch US Corporate Master Effective Yield, rose 1 basis point on June 17 to end at 2.99%.
Last week, the spreads were down by 2 basis points and ended at 1.5% on May 27, 2016. Meanwhile, the spreads are down by 19 basis points on a YTD basis.
Investment-grade bond yields fell slightly for the week ending May 27 after Fed Chair Janet Yellen stated that a rate hike would be appropriate in the coming months.
Investment-grade bond yields jumped in the week ending May 20 as the FOMC (Federal Open Market Committee) minutes indicated that the Federal Reserve may go ahead with a rate hike in June.
Investment-grade bond yields fell in the week ending April 29 as soft economic data raised concerns that the economy may not be ready to withstand a rate hike.
Widening spreads indicate a slowing economy. Since companies are more likely to default in a slowing economy, credit risk related to their bonds rises.
Investment-grade bond yields fell in the first quarter ended March 31, 2016. Fed chair Janet Yellen released a dovish statement on the interest rate hike.
Investment-grade bond yields fell in the week ended April 1 after a dovish outlook from the Federal Reserve despite a solid US jobs report and expansion in the manufacturing sector.
Liquidity hasn’t really deteriorated in some of the major segments of the bond market. Other direct liquidity measures suggest sufficient liquidity in the system.
Yields on high-grade corporate bonds, as represented by the BofA Merrill Lynch US Corporate Master Effective Yield, have fallen since the Fed released its March policy statement.
I believe that consumption demand patterns among millennials, including an emphasis on quality of life, is somewhat influencing this demand for travel and leisure, tech products and personal services.
Municipal bonds (or munis) were the best performers in 2015 with returns of 3.2%. Meanwhile, investment-grade corporate bonds (LQD), long-dated Treasuries (TLT), and high-yield bonds (HYG) all gave negative returns in 2015.
An alternative investment is an investment in asset classes other than stocks, bonds, and cash that seeks to provide a hedge against various market risks.
Preferred stocks are less volatile compared to common equities. This is mainly because a larger portion of the returns comes from dividends, which tend to be stable.
Credit markets tend to improve when the economy is improving. The possibility of a default on corporate bonds (LQD) drops, thus causing their yields to fall.
Adding bonds across credit classes helps diversify your bond portfolio. The weight of each category depends on your risk appetite and the business cycle.
We can expect muted returns from US equities going forward. US stocks face the prospect of higher interest rates, albeit gradual and from unusually low levels.
If spreads widen further, high-grade bonds will become more attractive because yields and prices are inversely related. A rise in yields indicates falling prices.
Yield spreads are the difference between the yields of two fixed income securities. In this article, we’ll look at yield spreads between Treasury securities.
The correlation between equities and high yield bonds is quite high, at +0.7. This is because both equities and high yield bonds depend on the well-being of the economy.
Investment-grade corporate bonds worth $55.4 billion were issued in the primary market in the week ended July 17, 2015. The number of issuers rose to 20 from 17 in the previous week.
Yields on investment-grade corporate bonds fell to a low of 2.84% in mid-April. US corporates and financials thronged the primary US bond market due to these low yield levels.
US economic indicators drove movement in investment-grade bond yields last week. A rise in gasoline prices led to an increase in US consumer prices in June.
US corporates dominated high-grade bond issuance in the week ended July 10, making up 54.4% of all issues. The week brought the year-to-date issuance of corporate high-grade bonds to $910.0 billion.
Investment-grade corporate bonds worth $39.225 billion were issued in the primary market in the week ended July 10. This was several times higher than issuance worth $500 million in the previous week.
For a large part of 2015 so far, yields on investment-grade corporate bonds have stayed below 3.10%. These bonds were in demand globally due to their higher yield.
Greece’s fate in the Eurozone drove investment-grade bonds last week. A safe-haven demand for most of the week pushed yields down. But investment-grade bonds saw yields rise week-over-week.
A stronger-than-expected private jobs report by ADP led to a rise in investment-grade bond yields. Non-farm payroll additions for June were lower than forecast, which helped cap the rise by moving yields down.
Investment-grade corporate bonds are debt instruments that are rated BBB- and above by rating major Standard & Poor’s. Most of 2015 to date has seen yields fall.
Baxalta, Energy Transfer Partners, JPMorgan Chase, Occidental Petroleum, and Cardinal Health were among the biggest issuers of investment-grade corporate bonds last week.
The Federal Open Market Committee’s June statement didn’t elicit a strong reaction in either direction from investment-grade bonds, especially not from Treasuries.
South Korea was the largest net buyer in April, purchasing US securities worth $4.6 billion. Meanwhile, Belgium was the largest net seller, letting go of securities worth $23.9 billion.
US corporates dominated high-grade bond issuance in the June 12 week—accounting for 56.5% of all the issues. US financials accounted for 8.4% of all the issues.
