Bond Compass Balancing Risk, Searching for Yield

State Street Global Advisors
By July 27, 2020 12:57

Bond Compass Balancing Risk, Searching for Yield

State Street Global Advisors has identified the key considerations for investors in the coming quarter, and how markets can be navigated using SPDR ETFs.

We remain positive on emerging market debt (EMD). While EMD has recently risen,less developed markets have struggled to shake off the pandemic. High infection rates in countries such as Brazil continue to affect the wider asset class. However, EM countries are diverse and, while some continue to suffer, others have contained the outbreak. This diversity makes EMD a compelling investment idea, with three key drivers.1 First, yields are relatively attractive in an otherwise low yield environment. Returns from coupons were 2.38% in H1 for the Bloomberg Barclays EM Local Currency Liquid Government Bond Index. The index now has a yield to worst of 3.65%, low by historical standards but higher than anything available in developed markets outside of high yield bonds. Second, uncertainty around the re-emergence of COVID-19 and wider geopolitical issues have resulted in market participants being underweight risk assets. We believe this position will gradually be reduced if markets remain stable. And third, a key element of future returns is expected to be led by a rebound in the currency. There have been some signs of recovery but the currency basket for the Bloomberg Barclays EM LC index remains more than 8% undervalued versus USD.2

State Street Global Advisors
By July 27, 2020 12:57

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🇺🇸S&P 500 Total Return Attribution

Multiple expansion explains the S&P 500's total return YTD, despite negative earnings growth 👉 https://www.isabelnet.com/?s=return

h/t @SoberLook #markets #investing #assetallocation #returns
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🇺🇸 S&P 500

Do valuations still matter? This chart puts into perspective the wide divergence between the S&P 500 and the US economy 👉 https://www.isabelnet.com/?s=S%26P+500

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