Market Matters: May 2020
Risk assets advanced again in May, building on April’s strong price momentum.
Credit/Fixed Income
Finding Credit Opportunities Amid the Coronavirus Crisis
COVID-19 plunged the global economy into a deep recession triggering concern over a surge in corporate defaults. Recent monetary and fiscal stimulus has allowed a rebound in credit assets ranging from high-yield bonds to highly rated asset-backed securities, but other markets remain dislocated.
US Manager Universe Statistics: First Quarter 2020
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
Market Matters: April 2020
Most risk assets surged in April, partially recovering from steep losses during first quarter’s volatile market environment. Global equities bounced back with double-digit gains, driven largely by US shares.
Life After Zero: Reassessing the Role of Sovereign Bonds with Negative Nominal Yields
In recent weeks, as the COVID-19 pandemic spreads across the globe, nominal high-quality sovereign bond yields throughout developed markets have plummeted toward zero, increasing the likelihood that most developed markets may soon need to contend with negative yields, and leading investors to question whether high-quality sovereign bonds are still the best form of insurance. In light of these developments, we examine the historical safe-haven characteristics of high-quality sovereign bonds and assesses whether they remain a viable safe-haven asset when nominal yields are negative.
Credit Spreads Take Pensions for a Wild Ride
As the COVID-19 outbreak has escalated in the United States, sponsors of single employer–defined benefit pension plans have experienced a roller coaster ride. Avoiding, or at least cushioning, another wild ride requires a well-designed hedging strategy that accounts for credit spreads. We provide context for this rapidly evolving spread environment and potential responses.
Market Matters: March 2020
Global risk assets suffered major drawdowns comparable to the global financial crisis in first quarter.
The Complex Relationship Between Inflation and Asset Prices
As we write in March 2020, COVID-19 is spreading across much of the world, undercutting economic activity. While we are unsure of how this situation will unfold, we have long believed that the best way to guard against future uncertainty is to have a well-constructed portfolio. One key component in that is understanding the relationship between asset prices and inflation.
VantagePoint: The Bear Awakens
In this edition of VantagePoint, we review the circumstances that have abruptly ended the bull market and evaluate the market implications of COVID-19. With that context, we discuss the case for rebalancing and evaluate some early opportunities.
Rate Cuts Are No Vaccine
On Sunday, the Federal Reserve Bank announced a host of emergency measures intended to improve bond market liquidity and reduce borrowing costs, which come in response to rising signs of dislocation across Treasury, municipal, and corporate bond markets.