Price and volatility in the high yield market are not showing any signs of stress. However, high yield ETFs are seeing a record amount of churning at the same time dealers continue to leave the cash market. Because high yield bonds are so idiosyncratic, this could lead to problems during times of turmoil in the markets.
Investors in U.S. Treasuries are shunning global economic data changes, placing most of their chips on U.S. growth. A breakout by inflation expectations is needed to extend the bearish slide on path to reach extremes according to ETF flows.
Rising concerns about commercial bankruptcy are bearish for U.S. high yield bonds. Similar shifts in search interest late last year preceded a wave of outflows from corporate debt funds. Tailwinds from higher rates may make financials a haven as investors flee other areas.
85 (17%) of the S&P 500 companies have reported Q3 2018 results through Friday. One-third are expected to report this coming week. So far the results have shown a return to more normal growth rates now that the tax cuts have run their course. Overall it is a good quarter with revenue beats disappointing slightly.
Today's topics include Italian debt woes, the search for wage growth, disrupting the FAANGs, a look at central bankers, reaching for yield, quants looking for diversification, capital inflows into China, the rise of defensive stocks and Blackrock's assets under management.
Slowing global economic growth has the potential to boost global risks and increase demand for safety.
The Bank of Canada is likely to press ahead with a rate hike next week despite the soft September inflation and retail sales. Slowing momentum for the economy and inflation, along with renewed softness in housing-related searches, may complicate plans for 2019.
Today's topics include the stock-bond relationship, Italian bond yields, the Federal Reserve, the boom in leveraged loans, the stock market sell-off, U.S. shale, how equities recover from negative trade war news and insider buying.
An inventory build-up is likely with search trends for shipping far exceeding those of consumer spending and capital expenditures. We expect the transportation industry to offer sub-par returns through year-end.
Soft September retail sales confirm the shift in U.S. consumer behavior away from shopping and toward experiences. We look at the impact on retail real estate, equities and investment grade credits.