Last quarter’s return of extremely accommodating monetary policies and the renewal of US-China trade talks were the two most significant developments affecting our five-year outlook as expressed in our Capital Market Line (CML). Since our CML focuses on how events
Chinese businesses are not just changing China, they are changing the world. This bespoke study dives into the dynamics that have led to the rise of new corporate giants, while at the same time uncovering trends, firms and drivers that
Should fixed income investors hedge currency exposure in their portfolios? That is the question – and the simple answer is “yes.” Yet, for investors looking to take currency exposure to generate additional return or to avoid hedging costs, we have
Credit spreads tightened in September after widening in August, although most asset classes remain around fair value. The dovish stance of central banks globally continued amid concerns about growth, Brexit, and risks of trade war escalation between the US and
US political news and uncertainties related to US-China trade policy continued to dominate headlines in September. Additionally, investors contended with attacks on Saudi oil fields, which led to a sharp, but short, spike in oil prices and turmoil in repo
The first reports from Saudi Arabia after drone attacks on its key Abqaiq and Khurais oil fields seemed grim. About half of Saudi production was lost, and the drones inflicted significant damage on two key types of equipment: spheroids and
What do emerging market giants China and India have in common with Nordic countries Norway and Sweden? These countries are leading the way to a cashless society. With the proliferation of credit cards, smartphones, and wireless broadband, transactions have never
Seeing Beyond the Complexity: Collateralized loan obligations are robust, opportunity-rich debt instruments that offer the potential for aboveaverage returns versus other fixed income strategies. Here, we explore how these instruments work, as well as the benefits and risks investors should
While credit spreads have widened modestly, current levels are within a fair valuation range. As a result, we have not changed our current allocations. We are modestly underweight emerging markets (EM) debt and neutral on leveraged finance asset classes. We
The current economic and policy environment has produced conditions that once existed only in the realm of thought experiments. Negative and near-zero interest rates are the prime examples. Such a state prompts what might be called a second-derivative thought experiment:
One of the key economic trends we’ve observed this year in the Asia ex Japan region is the synchronous lowering of policy rates from a broad range of central banks. That’s in contrast to a series of rate tightenings last
Leveraged Finance Asset Allocation Insights High yield bond and bank loan prices have come under pressure in August amid slowing economic data from Europe and China and a move sharply lower and flatter for the US Treasury curve. Inversion of
The fall in the value of the Chinese yuan against the US dollar and the Trump administration’s subsequent designation of China as a “currency manipulator” opened a new front in the US-China trade dispute, but one that came hardly as
Most times, credit markets are driven by fundamentals and expectations about the direction of economic measures such as GDP. On other occasions, emotion drives markets. This appears to be one of those times. Until May, markets were marked by confidence.
In volatile times like these – trade war fears or not – we believe global equity investors should stay focused on the fundamentals. The combined economic outlook for the world’s two largest economies, the US and China, is much improved
Leveraged finance markets continue to provide active managers with compelling opportunities to generate alpha. Here, we offer our views on how to use security selection and sector allocations to enhance a portfolio’s outperformance potential, while defending against the risks ahead.
Although widely anticipated and undoubtedly reflected in current pricing, a rate cut by the Federal Reserve nevertheless could trigger a short-term risk asset rally as past cuts have done. Nevertheless, we believe credit spreads will remain rangebound for the remainder
Fixed income markets are fixating on one simple question: Is the US heading toward a recession anytime soon? The answer, of course, isn’t so simple. While recession concerns have lessened so far this year compared with the high anxiety investors
Capital Market Line Quarterly Five-Year Forecast of Relative Risk and Return Across Asset Classes An important issue loomed at the core of last quarter’s exceptional chaos. Just as global manufacturing appeared to be bottoming, China emulated Trump and walked away
Like most periods of economic transition, the current rethinking and reshaping of global supply chains — heightened by US-China trade tensions, but begun earlier — is marked by uncertainty, lack of clarity, and even questions about whether it is actually
Like most periods of economic transition, the current rethinking and reshaping of global supply chains — heightened by US-China trade tensions, but begun earlier — is marked by uncertainty, lack of clarity, and even questions about whether it is actually
Tapping into Long-Term Opportunities While the trade dispute between the U.S. and China continues to dominate the headlines, and its recent slowdown in economic growth has raised some concerns, institutional investors should be looking closely at opportunities to invest in
Investment Strategy Insights Most emerging countries are economically fragile when entering the World Trade Organization (WTO) and are granted leniencies not available to developed countries. As China grew within the WTO to an economic superpower, it became clear that the
The Economy Keeps Improving and Spreads Keep Tightening The good macroeconomic news continues to flow, including healthy GDP growth, strong corporate earnings, and a continued dovish stance by the Federal Reserve. Specifically, the US economy expanded by 3.2% in the
The domestic A-share market offers the biggest and most diverse universe for long-term growth opportunities in China. Despite its size and liquidity, the A-share market remains highly inefficient and idiosyncratic providing plenty of opportunities for active investing. Local knowledge and
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With diverging credit and domestic demand trends in China, our expert #Anthony_Chan identifies the two main factors to watch. Read on.
