Forward rates: the unchallenged prophet
Predicting future interest rates is a favorite activity among economists and strategists, but Dimensional Fund Advisors takes a unique stance. “Forward rates are the best guide when positioning bond portfolios for higher expected returns,” they assert, dismissing the predictions of journalists and other ECB/Fed watchers.
Small caps endure rare drop but could be promising
Prices of small-cap stocks remain significantly adrift from their historical performance at the onset of a Fed hiatus, now offering a golden chance for value seekers. While a new study hails the performance small-caps during Fed pauses, critics cast doubt and warn that this historical trend is difficult to time precisely.
Not everyone shares fresh enthusiasm for bonds
Despite the resilience of the American economy, investors in Treasuries and bonds harbor stiff hopes for a quick Fed pivot during the third losing year. “But we aren’t there just yet,” said Fidelity’s global fixed income CIO Steve Ellis.
Geopolitical tensions reshape investors’ trust in Treasuries
The escalating conflict between Israel and Hamas challenges the appeal of US government bonds as a traditional safe haven.
Typically, geopolitical tensions drive short-term market moves towards safer assets like cash and US government bonds. However, on Wednesday, the yield on ten-year US government bonds increased by 0.07 percentage points to 4.9 percent, its highest since 2007. The 30-year bond yield also rose to 5 percent.
High-yield senior loans gain traction despite niche status
Senior loans, currently the highest-yielding bonds, witness substantial inflows in tracker funds.
Japanese stocks outshine, yet global investors hesitate
Despite posting impressive gains in 2023, Japanese equities seem under-appreciated among global investors. What’s behind this discrepancy in the world’s third-largest economy?
ESG on shaky ground: Higher fees no longer justify the risk
European ESG funds face a record number of closures as greenwashing scrutiny intensifies and the allure of higher fees diminishes, data shows.
Changing tides in Japan: markets brace for policy shift
Market participants are bracing for an unexpected — and for a long time, unthinkable — interest rate hike by the Bank of Japan (BoJ). In an interview on Saturday, BoJ Governor Kazuo Ueda indicated that he is considering raising rates “provided wages and prices continue to rise sustainably.”
Problems in China upset even enthusiasts
Chinese growth is disappointing. Global asset managers are liquidating large parts of their equity positions in the country, resulting in falling share prices. It seems like a godsend for bargain hunters, but passionate China investors are also on their toes.
China is not growing fast enough, so investors have been liquidating their positions in Chinese stocks at an unprecedented rate.
Falling dollar puts spotlight on ‘underinvested’ currencies
Declining inflation in the United States is pushing down the dollar. Analysts expect a more prominent role for currencies from emerging markets.
There are ‘strong indications’ that the decreasing US inflation figures, resulting in a lower interest rate expectation in the United States, have triggered the start of a cyclical decline of the dollar, say ING’s currency analysts, Frank Turner, and Francesco Pesole, in a note to investors.