Featured Market Outlook
Banks and COVID-19
Investors seem very bearish on global banks, as if expecting a 2008-type financial crisis to return in the near term. Yet banks are in a very different place now thanks to strong fundamentals.
Acting prudently and thinking long term at moments when others are panicking can provide a significant advantage over the long run.
Mid Week Bond Update
The FOMC's extraordinary emergency measures have rippled through the global economy.
Recession Indicators Update
We currently estimate the odds of recession at 75%, recognizing that some key indicators in our Recession Risk Dashboard have yet to fully reflect the economic impact of the coronavirus.
Around the Curve
Policy responses to the pandemic are rapidly shifting to a “whatever it takes” semi-wartime mentality to stem panic and get through the economic upheaval.
The Fed's moves to address liquidity issues in the Treasury market appear to be having the intended effect -- but pockets of concern remain.
While severe, we believe that the COVID-19 shock is likely transitory, and remain optimistic about the long-term U.S. economic outlook and real estate fundamentals.
Our base case: a sharp decline in Brazil's GDP followed by a rebound heading into 2021.
Inflation may stay subdued, but should move above the levels implied by current breakeven inflation rates once it's apparent that economic recovery has begun.
Volatility associated with recent deleveraging should start to dampen going forward; higher-quality companies with durable business models and good earnings visibility should weather this storm better than most.
Despite challenges posed by COVID-19, we believe overall municipal fundamentals remain intact -- and that attractive relative valuations will increase demand when volatility subsides.
Around the Curve
On March 23, the Fed announced dramatic actions, both in initiative and scale. But the nature of the crisis may require even more innovative moves.
As volatility increases, US fixed income investments backed by high-quality mortgage and consumer loans may potentially provide strong risk-adjusted return outcomes.
Zero rates arrive in U.S.
The zero interest rate policy announced by the Fed on Sunday will likely be here for a while -- and could continue even after COVID-19 concerns have moderated.
We believe the trend in equity markets will be lower until greater clarity emerges regarding the spread of COVID-19.
All investments involve risk, including loss of principal. Past performance is no guarantee of future results. Please see each product’s webpage for specific details regarding investment objective, risks, performance and other important information. Review this information carefully before you make any investment decision.