The only sure thing in today's global financial markets is change. There's always a new risk on the horizon — and a new opportunity for investors who know where to look. Putnam's portfolio managers and analysts offer their experienced perspectives each week on the events making news and moving markets. We hope you join the conversation, too. See our commenting guidelines for details.
Posted by Robert L. Salvin, Portfolio Manager, June 13, 2013
A common misperception of the convertibles market is that the returns of these securities are more dependent on interest rates than on other factors. Over time, data have suggested that convertibles are driven more by the strength or weakness of the equity markets, and corporate credit spreads. And because the convertibles are short-duration instruments, there is generally a low correlation between their performance and interest-rate movements. So, while low rates do matter for a variety of asset classes, rates are less relevant to convertibles’ performance.
During the four most recent rising-rate environments — in 1988, 1994, 1999–2000, and 2004–2006 — higher rates, economic expansion, and equity market strength led to good performance for convertibles. A rising-rate environment should also be positive for the new-issue market, as rising rates can sometimes coincide with rising equity prices.
We evaluate the high-yield market by looking at three key factors: fundamentals, valuation, and “technicals,” or the balance of supply and demand. We are neutral on all three. Looking first at fundamentals, we see an economic landscape marked by countervailing … Continue reading »
Posted by Jason R. Vaillancourt, CFA, Co-Head of Global Asset Allocation, May 28, 2013
While we find U.S. equities attractive, Japan has become a more interesting market, mainly because of the broad political support for the new prime minister, Shinzo Abe. To get Japan out of its deflationary spiral, Abe has pushed forward a … Continue reading »
Posted by Robert L. Reynolds, President and Chief Executive Officer, May 22, 2013
Working with a financial advisor is one of the top three drivers of retirement savings success, according to Putnam’s latest Lifetime Income ScoreSM survey. In addition to the benefits of professional advice, the study found that access to a workplace … Continue reading »
Today, while investors have lower expectations for revenue trends, there is potential for mid- to high-single-digit earnings growth. Considering the current level of valuations, our outlook is fairly constructive for corporate earnings in 2013. For some time, our theory has … Continue reading »
Investors have been somewhat more cautious on the corporate-debt sector lately, with spreads — which measure the yield advantage versus Treasuries — tight by historical standards. To be sure, the financial health of corporations in the investment-grade space continues to … Continue reading »
A number of developments in early 2013, including the long deadlock in Italian politics following the March elections, and the brinksmanship surrounding the EU bailout for Cyprus’s banking system, were notable specifically because of the muted market reaction they elicited. … Continue reading »
Posted by Putnam Tax Exempt Fixed Income Team, May 8, 2013
Since January, much of the talk from the political class has revolved around sequestration, the other half of the fiscal cliff that mandated 2% across-the-board spending cuts. While the political rhetoric associated with those cuts often has painted them as … Continue reading »
Posted by Robert D. Ewing, CFA, Co-Head of U.S. Equities, May 1, 2013
The economy today has progressed to the middle stages of the recovery. In the early stages, we typically see companies in cyclical sectors outperforming the rest of the market and rebounding from their lows with huge earnings growth rates. In … Continue reading »
Capital Markets Outlook (PDF) 2Q 2013
Stocks may be tested in the second quarter by uneven economic data and policy-related risks.
Fixed-Income Outlook (PDF) 2Q 2013
Strong fundamentals in corporate and municipal debt make credit risk attractive.
About the authors
Putnam’s veteran team of portfolio managers and analysts has invested over multiple economic cycles and in markets worldwide. They bring a global perspective and a wealth of expertise to the insights they offer on today’s market trends.