Recently, we asked which had more clout with investors, the FOMC or President Trump’s tweets. Now we know: tweet trumps Fed.
Entering the second half of 2019, our portfolios are positioned to reflect seven key themes.
No one likes the messenger who brings bad news — unless that news leads the Fed to cut interest rates.
We remain focused on our central theme of positioning portfolios to avoid downside velocity. Regarding trade concerns, this means reducing exposure to globally-oriented investment grade credits and monitoring emerging market opportunities.
Avoiding downside velocity is our primary focus as we evaluate industries, sectors and regions across the world. Given the global monetary picture, the United States looks relatively attractive in this light.
While volatility is here to stay, so far it is confined largely to equity markets. Credit spreads have widened but less than in previous equity sell-offs; this indicates that widening is not a fundamental concern and reaffirms our cautious but not bearish view.
Voya Investment Management's CIO of Fixed Income, Matt Toms, CFA breaks down the major themes of 2018 and discusses the key market trends that are likely to lead to a return of volatility.
We've held short duration much of the year to buffer gradually rising rates, and are staying short into year-end. We are tactically increasing investment-grade and high-yield corporate credit risk. We remain positive on securitized assets, preferring CLOs and CMBS, and are slightly overweight select emerging markets.
The global economy looks healthy yet uncertainty persists: geopolitical risk from North Korea, tax reform in Washington, naming a successor to Federal Reserve chair Janet Yellen and the European Central Bank's rollback of QE. We view these uncertainties as reasons to pull back risk despite strong market fundamentals.