Highlights The lingering global manufacturing recession and the substantial drop in U.S. bond yields have been behind the decoupling between both EM stocks and the S&P 500, and cyclical and defensive equities. Neither the most…
Highlights The U.S.-Sino trade war is taking a dangerous turn, but the U.S. should avoid a recession until 2022. Global growth will bottom in early 2020. The Fed is set to cut rates two to three times in the next year. Safe-haven…
Highlights The current global trade downtrend has primarily been due to a contraction in Chinese imports. The latter reflects weakness in China's domestic demand in general and capital spending in particular. The current global…
With this cyclical decomposition in mind, we can calculate the median breakeven spread for each credit tier in past Phase 2 periods and use that as a spread target for this cycle. We then convert our breakeven spread targets into…
The chart above shows the 12-month breakeven spread for each credit tier as a percentile rank relative to history. We show each credit tier individually to control for the time-varying average credit rating of the overall indexes…
Highlights Duration: Hawkish trade policy will continue to weigh on bond yields for at least the next few months, but a rebound in global economic growth should take hold before the end of the year. Ultimately, a growth rebound will…
The average U.S. High-Yield index option-adjusted spread has widened sharply in the past few days, from 371 bps at the end of July to 431 bps currently. We are inclined to view the recent spread widening as fleeting…
Highlights Chinese economic growth slowed in June & July, but at a more moderate pace than had been the case earlier this year. The housing market is a notable exception, which appeared in June to slow in a broad-based fashion.…
Highlights Chart 1Keep Tracking The CRB / Gold Ratio The Fed cut rates by 25 basis points last week, a move that Chairman Powell described as an “insurance” cut meant to counter the risks from trade tensions and…