Invesco Canada blog

Insights, commentary and investing expertise

Fed cut meets market expectations, but future cuts are in doubt


September 20, 2019
Subject | Invesco | Macro views

The U.S. Federal Reserve (Fed) cut interest rates by 25 basis points Wednesday to a range between 1.75% and 2%, as widely expected by markets. However, the Fed’s economic projections showed that the median Federal Open Market Committee (FOMC) member does not expect to cut rates again this year, marking potential disagreement among FOMC members and with markets; the bond market is currently pricing an additional rate cut this year and some FOMC members have expressed interest in future cuts.

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Five things to watch in September


September 3, 2019
Subject | Macro views

August is supposed to be a slow, relaxing month – but this August was anything but that for investors. Trade frictions were on the rise for much of the month. The U.S. Treasury yield curve inverted several times, causing jitters for investors concerned that a U.S. recession is imminent. Of course, stock volatility rose, with the CBOE Volatility Index (VIX) hitting its highest level of 2019 in the month of August.1 Instead of enjoying calm, sunny days, markets were rocked last month by interviews with Federal Open Market Committee (FOMC) members at Jackson Hole, tweets from President Donald Trump, and geopolitical events in the U.K., Italy and India – to name just a few.

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Argentina’s presidential primary raises policy questions


August 14, 2019
Subject | Macro views

Argentina’s presidential primary elections shocked investors Sunday when President Mauricio Macri suffered a major defeat against leftist politician Alberto Fernandez, whose running mate is controversial former president Cristina Kirchner. According to the official election results, Macri received 32% support while Fernandez received 48%, a much wider margin than expected. Election authorities reported high voter turnout at 75%, and Fernandez won every province except Cordoba and the City of Buenos Aires.

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Measure twice, cut once: Fed delivers expected cut


August 1, 2019
Subject | Invesco | Macro views

The U.S. Federal Reserve (Fed) cut rates by 0.25% for the first time in over a decade,1 a move largely expected by the market. Heading into the July Federal Open Market Committee (FOMC) meeting, much of the debate was around whether or not the Fed would deliver 25 or 50 basis points. However, we were focused on the statement and Fed Chairman Jerome Powell’s press conference for further insight on future policy. Future policy, or the Fed’s reaction function, is particularly important as we navigate in an environment where we believe market pricing indicates more cuts than our economic outlook would imply.2

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Don’t be so negative: Finding value in U.S. corporate bonds


July 25, 2019
Subject | Institutional | Macro views

As yields across the globe plummet, many investors are now actually paying someone to take their money. Currently, there are more than US$12 trillion of bonds with negative yields outstanding which equal 24% of the global bond market.1 In Europe, the search for positive yield is especially challenging. Over half (51%) of the European bond market now yields a negative rate.1 Germany recently issued €5 billion of bunds at a price of €101.5, but these will only return €100 in two years with zero coupons paid.2 And according to Reuters, Austria is also rumoured to be planning to issue a 100-year bond at roughly 1% to feed yield-hungry investors.

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The potential benefits of Emerging Market debt


July 17, 2019
Subject | Active management

Emerging market debt has evolved over the past few decades from a source of political and economic vulnerability to a potential positive driver of portfolio returns. The addition of new sovereign issuers (denominated in U.S. dollar and euro) has broadened the opportunity set for global investors, and corporate issuance has meaningfully contributed to its growth.

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Invesco Global Bond Fund: The first three years


July 9, 2019
Subject | Active management | Invesco

Invesco Global Bond Fund crossed its three-anniversary with strong returns, finishing in the top quartile of its peer group.1 The management team navigated choppy waters with a changing mix of assets to capture upside in good times while providing protection in more challenging periods. The use of corporate credit, mortgage back securities and emerging markets helped to generate returns in calm markets, while a significant allocation to global government bonds helped to provide ballast during times of volatility.

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ECB worries have receded, but Fed policy doubts have some pundits on the defensive


July 8, 2019
Subject | Invesco | Macro views

I spent the past week in Knoxville, Tennessee, watching my daughter’s basketball team play in a national tournament. I am the unofficial scorekeeper of the team, which makes the experience even more interesting, as I track the games on a variety of metrics. What I found is that the risks to my daughter’s team were different in each game, depending on the abilities of the opposing team. It reminded me that various market environments present different risks and, just as quickly as one game ends and a new game against a different team begins, so too can environments change.

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Navigating the low interest rate environment


July 3, 2019
Subject | Invesco | Macro views

The most recent monetary policy meetings from the Federal Reserve (Fed) and European Central Bank (ECB) laid the ground work for a new round of interest rate cuts and potential quantitative easing (QE) in Europe. This comes as global central banks are trying to get in front of softening economic data and disappointing inflation measures.

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Algorithm Wars

The U.S. cycle breaks a record. So now what?


July 2, 2019
Subject | Invesco | Macro views

Kristina: As of July 1, the U.S. business cycle has set a new record for longevity. It’s a significant milestone, to be sure, but what does it really mean for investors? The answer might not be what you think. To help put this cycle into context, I’m turning over this edition of Weekly Market Compass to my colleague Brian Levitt, Global Market Strategist for North America.

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The superiority of Canadian Corporate Credit


June 27, 2019
Subject | Invesco | Macro views

Canadian companies continue to benefit from a strong earnings growth backdrop, especially in domestic facing sectors of the economy. Demand for new bond issuance remains exceptionally strong, highlighted by the recent all-time record number of buyers1 for a 10-year bond issued by Telus Corporation. In a world of a growing stock of negative-yielding debt, demand for high-quality, I believe positive-yielding bonds should continue to be well supported.

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Could central banks boost stocks in the second half?


June 24, 2019
Subject | Invesco | Macro views

The Federal Reserve (Fed) met last week and clearly telegraphed that it will no longer be “patient” and that it is leaning toward loosening monetary policy. Why? Fed Chair Jay Powell said trade developments and global growth concerns are on the mind of the central bank. As I look into the second half of the year, those two items are key to my outlook as well – and I believe the willingness of central banks to become more accommodative could be a positive development for stocks.

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Will the Fed lose its patience this week?


June 17, 2019
Subject | Invesco | Macro views

All eyes will be on this week’s U.S. Federal Reserve (Fed) meeting — especially the statement (whether the central bank will retain its “patient” stance) and the “dot plot” (which charts the outlook for interest rates). The June 18-19 Fed meeting is very important because market expectations have gotten so dovish recently. And with risks rising, many investors recognize that once again the Fed stands between them and a more challenging stock market environment.

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Central banks provide a silver lining to the escalating trade war


June 10, 2019
Subject | Invesco | Macro views

A collective sigh of relief was expelled on Friday evening as U.S. President Donald Trump announced he would indefinitely suspend the planned imposition of tariffs on Mexico – which was set to go into effect on June 10. Markets have entered “risk on” mode, given that the crisis was averted. However, we need to recognize that the announcement that the U.S. would apply a tariff on Mexican goods as a way to address immigration was a “game changer.” I believe strongly that just the threat of using tariffs to achieve non-trade policy objectives is very concerning and will likely contribute to a significant escalation in economic policy uncertainty – even though the current situation has been resolved.

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What does the fragmented parliamentary election mean for Europe?


May 30, 2019
Subject | Invesco | Macro views

All eyes were on Europe this past week. First, U.K. Prime Minister Theresa May announced her resignation. Then the European parliamentary elections took place. Here are the key takeaways from a momentous week for the European continent.

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Canadian yield curve points to slow growth, not recession


May 29, 2019
Subject | Invesco | Macro views

The economic implications from an inverted yield curve may be overstated, in our view. Historically, when short-term interest rates, anchored by central bank policies, yield more than longer duration maturities the bond market is signaling that monetary policy has become restrictive. Taking on more interest rate risk in your portfolio for less yield to maturity is an unattractive option for investors.

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What’s your risk outlook?

I have the good fortune of meeting with advisors across Canada and hearing directly about the issues that are top of mind for their clients and their businesses. Usually there’s a certain amount of consistency to what they tell me in terms of sentiment in the market. The big picture view of asset class trends also tends to provide a consensus on where advisors are actively making allocations and how they are positioning investor portfolios.

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Three key takeaways from four days in Europe


April 9, 2019
Subject | Invesco | Macro views

Last week I had the pleasure of traveling in Europe, meeting with colleagues and clients in several different countries. It was a whirlwind tour, but it was well worth the jet lag to get an in-person account of the various issues facing Europe today. Below, I share three key takeaways from my trip.

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