In our view, U.S. corporates appear attractive even noting the recompression of spreads since the first quarter.
In our view, in a landscape of improved risk sentiment and strong demand for yield, U.S. corporates appear attractive even noting the recompression of spreads since the first quarter. While corporates have retraced a significant portion of their year to date widening, other sectors and asset classes have gone further, leaving corporates relatively well positioned. With global government yields as low as they are, demand for income is strong. At the same time, the March volatility is still fresh, making the more balanced profile of investment grade corporates appealing. Further, with the Fed’s changes to inflation policy, an even longer timeline for accommodation appears on the horizon. To date, the Fed’s accommodative policies have kept rates low while risk assets have rebounded and this longer timeframe for accommodation could keep this dynamic in play for a prolonged period. The recent downward trend in coronavirus cases in the U.S. along with hopes of improved testing have sparked optimism, but we do not discount the possibility of future volatility. While some economic data such as economic growth is expected to improve, other data such as employment figures remain challenged, highlighting the remaining uncertainty and need for balance in portfolios.
All investments involve risk, including the possible loss of principal.
This is not intended to serve as a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. Information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. This publication is prepared for general information only. This material does not constitute investment advice and is not intended as an endorsement of any specific investment. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investment involves risk. Market conditions and trends will fluctuate. The value of an investment as well as income associated with investments may rise or fall. Accordingly, investors may receive back less than originally invested. Investments cannot be made in an index. Past performance is not necessarily a guide to future performance.