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It appears likely that the U.S. economy will continue to improve, keeping interest rates elevated and volatile. The U.S. recovery, despite higher taxes, generally rising interest rates, and broad-based budget cuts enforced by the federal sequester, appeared to remain on track through the second quarter, and we see the United States maintaining this course in
Given the climate of rising rates — and the degree to which rates have shown their ability to back up on fears of the eventual quantitative easing (QE) withdrawal — we believe term structure risk is best avoided in favor of sectors with more attractive risk-and-return profiles. In the second quarter of 2013, the debate
Based on its internal dynamics, the U.S. economy continues to be one of the most attractive for investors. One of the key pillars of support for the U.S. economy has been the housing market. Dynamics of the housing market include low prices, low mortgage rates, high pent-up demand due to rising household formation, and institutional
The Fed’s comments in May and June about reducing its asset purchase program generated significant interest-rate volatility in the United States, changing the opportunity set for fixed-income investors. Spread sectors — meaning sectors that trade at a yield premium to U.S. Treasuries — that had been buoyed by the massive liquidity created by the Fed’s
For several decades, the Barclays U.S. Aggregate Bond Index (known as the Lehman U.S. Aggregate Bond Index until November 2008) has been a central reference point for bond investors — a benchmark with widespread acceptance comparable to the S&P 500 or the Dow Jones Industrial Average in the equity world. The “Agg” comprises more than
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
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 trends. GDP figures in the United States continued to lag past recoveries. Nonetheless, corporate fundamentals
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 number of new monetary and fiscal policies. Both the yen and the Japanese stock market
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 savings plan and deferring at least 10% of income would best position a household for