While we expect muni downgrades, the market is likely to remain high quality, with low defaults relative to other bond types.
Long U.S. Treasury yields ended last week slightly higher, while shorter-maturity yields finished lower.
The coronavirus crisis, which ignited steep increases in credit spreads and temporarily froze segments of the fixed income market, can give investors insight into how different types of bonds perform in financial turmoil. In that vein, we looked at performance from companies with high quality financials and strong environmental, social and governance (ESG) practices. We think investors should take note of the value these characteristics offer in this market.
Barings’ Omotunde Lawal and Cem Karacadag explain how COVID-19 is impacting the economies of emerging markets, and how lower oil prices and loose monetary policies may influence the future default picture.
COVID-19 and lower oil prices have led to indiscriminate selling across EM corporate debt, creating a potentially compelling opportunity in the shorter-dated, higher-yielding segment of the market.
Now that the proverbial rubber has met the road, many investors are questioning what’s in store for private credit in the months (and years) ahead. In many ways, the current volatility is setting the stage for significant opportunities—but managing the downside is critical.
U.S. Treasury yields rose last week, as investors expressed optimism regarding developing a COVID-19 vaccine. The first 20-year Treasury issue in decades was auctioned on Wednesday, with the issue’s yield ending the week slightly lower.
Securitized credit has lagged the rebound in other assets, but T. Rowe Price believes that areas could outperform as the economy reopens.
Treasury yields fell last week, led by longer maturities. Markets focused on a record monthly decline in core consumer goods, despite better-than-expected sentiment and manufacturing data.
Longer maturity Treasury yields increased and shorter maturity rates fell again last week, as increases in Treasury auction sizes were much larger than expected.
In our view, the markets feel much healthier at the end of April than a month ago, but underappreciated in the improved sentiment is not only the scale of March policy action, but its continuation into April. Actions announced in April would ordinarily have remained in headlines and discussion for weeks, but the nearly half trillion dollar U.S. fiscal stimulus package has been treated almost as a footnote to its much larger cousin in March. Similarly, Fed and other central banks not only continued to implement the massive programs initiated last month, but significantly expanded on them.