The impact of the coronavirus has made for a crazy couple of weeks in the financial markets. Bonds are comfortably below 2 percent and the 10-year Treasury yield is hovering around 1.3 percent. At the same time that long Treasury yields are making new historic lows, credit spreads, while widening, remain relatively tight. I am not saying the worst is over, but it is time to take a break and assess the next moves.
By Scott Minerd, Chairman of Investments and Global CIO
We are trying to buy as many high-quality longer-duration assets as possible at reasonable yields to help lengthen duration in the face of potentially lower rates, but 3 percent is becoming a difficult yield to reach. We are selectively adding to BB credits which we think are “money good” to certain accounts to enhance yield. Eventually, we may have an opportunity to add more risk assets to our client portfolios as economic growth slows around the world and corporate borrowers default. The chances of recession are rising rapidly, for which we are well positioned.
—Scott Minerd, Global CIO; Brian Smedley, Head of Macroeconomic and Investment Research; Matt Bush, Director
Recession Outlook Summary
Recession Expectations Go Mainstream
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