Invesco Canada blog

Insights, commentary and investing expertise

Yield signs: Deconstructing a key market indicator


April 24, 2018
Subject | Invesco | Macro views

The biggest news of last week was not a tweet, but a Treasury yield – specifically the 10-year U.S. Treasury yield, which rose significantly last week, to 2.95%.1 As of this writing on Monday, the 10-year Treasury was yielding 2.98%, very close to the key 3% level it has not seen in more than four years.1 But what is this key market indicator telling us? And why do people care?

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As U.S.-China trade drama continues, is a risk-off stance warranted?


April 10, 2018
Subject | Invesco | Macro views

Last week saw an acceleration of the protectionist rhetoric between the U.S. and China. The week ended on a down note, with U.S. President Donald Trump tweeting a proposal for another $100 billion in tariffs, swiftly followed by China, despite its important holiday, promising to match the most recent round of tariffs and fight the U.S. “at any cost.” Following China’s threat, Trump admitted that the U.S. may feel some “pain,” while U.S. Treasury Secretary Steven Mnuchin conceded that, though unlikely, “there is the potential of a trade war.”

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Five things to watch in April


April 3, 2018
Subject | Institutional | Invesco | Macro views

The first quarter of the year has ended with major developed market indices down slightly and major emerging market indices up slightly. But those numbers belie a very turbulent period in which stocks were whipsawed. Bonds also experienced gyrations, with the yield on the 10-year U.S. Treasury moving from 2.41% at the start of the quarter to a peak of 2.94% and ending at 2.74%.1 As we begin the second quarter, there are five critical things to watch.

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Tariffs, trade war concerns help spark equity market sell-off


March 27, 2018
Subject | Invesco | Macro views

It seems we are beginning to smell the faint hint of fear in markets. Not only did stocks sell off globally last week, but investors also fled to the safety of U.S. Treasuries, which drove the 10-year Treasury yield down to 2.817% – a level not seen in weeks. Last week’s market rout was the worst week for stocks in two years.

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Revolving headlines lead to a tug of war for stocks


March 20, 2018
Subject | Invesco | Macro views

Across the globe, stocks experienced a tug of war last week, with good news (positive earnings and other signs of accelerating growth) and bad news (concerns that protectionist actions could slow economic growth) influencing the markets. I believe this tug of war will very likely continue going forward, and I’ll be closely watching for more market-moving news this week as new central bank leaders make their debuts.

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Protectionism tightens its grip


March 13, 2018
Subject | Invesco | Macro views

I’ve been warning for some time about the economic dangers of protectionism and the potential for retaliatory policies that could stifle free trade. Last week, this threat intensified – and that was just the tip of the iceberg in a week filled with market-moving news. Below I highlight five critical headlines from last week and preview what’s ahead.

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Four risks to watch in 2018

Our market outlook is positive, but institutional investors need to be ready for disruption

My base case for 2018 is that global growth will be solid and accelerating while global inflation will be low and benign. While I expect central banks around the world to tighten financial conditions, I believe the pace will be slow enough that overall financial conditions should remain accommodative. If my positive expectations for global growth, inflation and financial conditions come to pass, then the environment should be supportive of all risky assets in 2018, including credit and equity. However, we can’t ignore the potential risks to these conditions.

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The dangers of protectionism


March 6, 2018
Subject | Commodities | Invesco | Macro views

Geo-politics is back in the spotlight, with German Chancellor Angela Merkel finally securing a governing coalition after nearly six months of uncertainty, while Italy embarks on its own period of uncertainty, given the inconclusive results of its election this past weekend. Italy’s voters are following in the recent footsteps of voters in the United Kingdom, the United States, Germany and elsewhere – questioning the “status quo.”

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Five upcoming events that could drive markets


February 27, 2018
Subject | Invesco | Macro views

Markets took another roller coaster ride last week. The yield on the 10-year U.S. Treasury bond rose to 2.95% – a level it hasn’t seen in four years – but then moved lower by the end of the week.1 Stocks also vacillated, largely in response to those Treasury yield movements. It appears that markets are unsettled and primed to react to the news of the day – both negatively and positively. Below, I discuss five upcoming events that could possibly be the catalyst for more moves ahead.

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Good news is bad news: Deconstructing the market sell-off


February 13, 2018
Subject | Institutional | Invesco | Macro views

Stocks globally have experienced more than a week of tumultuous trading, with the U.S. stock market officially in correction territory. And after being relatively sedate for years, the VIX Index has risen dramatically in recent days, indicating rising volatility. Stocks have moved so far so fast that investors have experienced financial whiplash and are trying to understand what caused markets to change course so abruptly. To put it simply, almost everything that should be a positive for stocks is now a negative for stocks.

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Lessons from the stock market sell-off


February 5, 2018
Subject | Invesco | Macro views

Last week ended on a bad note. The yield on the 10-year Treasury moved up from 2.695% to 2.852% in just five days,1 spiking on the release of the U.S. employment situation report for the month of January. Not only did yields globally then rise, but this brought on the biggest sell-off in U.S. stocks in nearly two years – which then spread to Europe and Asia, putting downward pressure on equities in those regions. As I write this, futures suggest an extension of the sell-off today.

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Is the world shifting from connection to economic protection?


January 30, 2018
Subject | Institutional | Invesco | Macro views

Last week offered some stark reminders that we live in a very global and interconnected world. Given how interwoven our international relationships have become, the current trend toward de-globalization carries with it many consequences — and protectionism could become the biggest economic risk of them all.

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Disruption abounds, but will it matter to the markets?


January 23, 2018
Subject | Invesco | Macro views

For the past year, I’ve been talking about disruption as a key theme for the markets and economy. During the past week – with the shutdown of the U.S. government, continued efforts to form a coalition in Germany, and an Olympic agreement coming out of the Korean peninsula – it’s become clear that the theme of disruption remains front and center. Particularly geopolitical disruption.

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Getting a read on the Goldilocks economy


January 9, 2018
Subject | Institutional | Invesco | Macro views

Last week saw the release of the latest U.S. employment report, with just 148,000 nonfarm payrolls created in December.1 This was significantly below expectations and the previous month’s reading. However, it may have been a Goldilocks jobs report: It is good enough to stave off any concerns that the economy may be weakening, but it’s not strong enough to suggest that the economy is overheating.

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Ten expectations for 2018


January 3, 2018
Subject | Institutional | Invesco | Macro views

Last year was a strong one for capital markets. Most countries’ stock markets posted positive returns, with many markets, including the U.S., posting double-digit gains. Globally, and in the U.S., the best-performing sector was technology. Energy was the worst-performing sector globally – and was one of the worst-performing sectors in the U.S.1

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Who’ll be watching the punch bowl in 2018?


December 19, 2017
Subject | Institutional | Invesco | Macro views | Trimark

Last week saw a confluence of central bank meetings and decisions over the course of two days. They revealed central banks that are in the process of – or on the verge of – tightening. I was reminded of former Federal Reserve (Fed) Chair William McChesney Martin, who said the central task of his job was “to take away the punch bowl just when the party gets going.” But is the party really just getting going – or is it getting long in the tooth? And, most importantly, who is the chaperone? And how strict are they?

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Bitcoin: Digital currency or digital tulip?


December 12, 2017
Subject | Commodities | Institutional | Invesco | Macro views

Now, for the first time, investors are able to purchase futures on bitcoin, the digital currency. The Chicago Board Options Exchange just began offering derivatives contracts which provide the ability to bet on the future price of this cryptocurrency. The CME Group will also be offering derivatives contracts on bitcoin in the coming week. Investors seem to be excited about this opportunity, sending the price of a single bitcoin thousands of dollars higher in the past several weeks in anticipation of the launch of these futures contracts.

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