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Market Outlooks
Where We See Opportunities Ahead
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The news today makes the short-term economic outlook uncertain. Yet, we invest for the long term, not just for the next few months or even years. Given the attractive valuations we saw near the end of the first quarter, we think long-term returns look much better for investors now than they did just three months ago.
Please join our discussion with President and Global Chief Investment Officer Daniel Needham, Co-Head of Target Risk Strategies Dan McNeela, and Head of US Equity Strategies Michael Corty.
Market Outlooks
Financial Literacy: Coronavirus - Signals to Watch
Invesco’s financial literacy program is designed to help advance the wealth conversations in which we believe families need to be engaging. The goal is to help families better understand how to accumulate, protect, and distribute wealth while building and maintaining a family legacy that will endure across multiple generations. The program provides a framework for incorporating all family members into these conversations, as well as financial and investment considerations for each stage of the life cycle.
Market Outlooks
Compelling Wealth Management Conversations
Invesco’s “Compelling Wealth Management Conversations” program is designed to provide the broad philosophical and historical perspective that your clients need to defuse both their fears and misperceptions.
Fixed Income Insights
May 2020 Fixed Income Market Update
This piece is approved to use with clients.
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.
Market Outlooks
What’s next for China?
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As the first country to tackle COVID-19, China has institutional investors globally wondering about the local situation – and what it means for their portfolios. June Lui, Portfolio Manager, BMO LGM Investments, gives an on-the-ground assessment of China’s economic backdrop and the impact on stocks.
Market Outlooks
The enemy of a major economic slump is debt
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This is a hard commentary to write. The situation is obviously very grave but also extremely fluid and no one has any special or privileged insight as to when a degree of normality may return. All pandemics end but it would be foolish on our part to suggest that it will be over within a few months. What is clear is that the world is tumbling into a serious global recession with significant unemployment. When both supply and demand collapse the end result is obvious and unavoidable. Governments and central banks have thrown several kitchen sinks at the crisis but with a world in lock-down it does little to lift economic activity. Expenses go up but incomes go down.
Fixed Income Insights
Municipal Yields Have Converged
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Over the past several weeks, yields between short- and intermediate-term Municipal Bonds have converged. This may be an opportunity for investors to significantly reduce interest rate risk while sacrificing minimal income since shorter-term bonds typically have less sensitivity to rates.
Market Outlooks
Virus starts with v but ends with u-shaped
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2020 began largely as we expected from an economic perspective, but as the first quarter ended it was difficult even to remember what “normal” economic times looked like, that is, before COVID-19 mushroomed and became a global health crisis.
Before the situation deteriorated in late February, many economists expected the economic effects of the virus to be primarily felt in the first and second quarters with a “v-shaped” recovery to follow. Now many expect a “u-shaped” recovery occurring perhaps by year-end. Economic indicators can lag the headlines, but U.S. unemployment had already begun to spike as the first quarter ended with more to come, likely climbing to double digits as large segments of the economy remain shut down in an effort to contain the virus. We have seen second-quarter annualized GDP estimates ranging from -5% to -30%, but the unprecedented combination of a pandemic and the modern global economy makes this very difficult to call. The numbers will be painful, regardless of the precise magnitude. In terms of the human cost, the pain is already acute.
Market Outlooks
Corporate credit spreads widened aggressively in March 2020
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Credit markets have seen extreme repricing over the past month as a result of the market stress caused by coronavirus and its impact to the economy. The period through March 26 saw some of the most aggressive corporate spread widening in history, with the worst days experiencing almost twice as much widening as any day in 2008. Global investment grade corporate credit spreads reached 340 basis points after having started the year at 102, and we saw global high yield spreads widen past 1,000 basis points as an index, which is generally the level considered the threshold for individual bonds to be considered part of distressed indices.