Understand emerging markets opportunities and the American Century advantage.
By Rich Taylor & Joyce Huang, CFA - February 2019
Treasury yields show little change. The benchmark 10-year U.S. Treasury yield finished February only 1 bp higher than it was 30 days earlier. Yields headed slightly lower until late February, when the government released its fourth-quarter GDP report. Although growth moderated compared with the third quarter, it was stronger than many expected, driving Treasury yields higher.
Yield curve steepens slightly. Amid continued dovish language from the Fed, the two-year Treasury yield fell 6 bps to 2.52% for the 30-day period, and the yield curve steepened slightly. In terms of total return, shorter-duration securities were up fractionally, while longer-duration bonds declined.
Risk remains in favor. Against a backdrop of upbeat corporate earnings reports and better-than-expected economic growth, corporate bond returns advanced modestly. Performance from high-yield corporates was even stronger, bolstered by the rallying stock market and rising oil prices.
Global yields mixed. Although economic growth continued to slow in Europe, yields in the eurozone were mixed. For example, yields were higher in Spain, Italy, and France and flat in Germany. U.K. bond yields were up slightly, despite continued Brexit-related uncertainty. Dovish comments from the Fed helped support gains among external emerging markets (EM) bonds, while a stronger U.S. dollar pressured returns for local EM bonds.
Notes from the Global Fixed Income Desk
Monthly analysis of the global bond market.
Abdelak Adjriou, discusses his view on the current investment environment and the benefits of allocating into emerging market debt.
In this highlights clip of a recent Asset TV Institutional Masterclass panel, Abdelak Adjriou discusses mispriced risks, increasing oil prices, central bank normalisation, and total return approaches in emerging markets debt.
After a reprieve in July, volatility has returned to emerging markets assets, thanks mostly to tumult in Turkey.
August 14, 2018
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
FOR INSTITUTIONAL USE ONLY | NOT FOR PUBLIC USE