Sector Performance Recap Industry Total Returns – Energy, Materials, Travel Still in Focus Investor Flows: Risk-On Flows Have Seemingly Peaked What’s Going on With Credit Volatility? Americans are Back on the Move Vehicle Sales Struggling to Maintain Pace Issuance Recap Click to view the full report.
Investors’ flows into risk assets reached a crescendo in mid-February. We are beginning to see dampened demand for global equities and inflation protection, but increased demand for lower beta sectors and even government bonds.
Inflation expectations have been red hot as investors consider pricing in headline CPI above 2.5% YOY. Given exceptionally high Sharpe ratios and the ubiquity of the inflation revival across the globe, investors need to see realized inflation prints surpass long-run averages to stay committed.
Industrials Starting to Lose Their Edge Auto Demand Takes a Step Back The Rent Narrative May Get Messy Bank Loans, Munis and TIPS on the March Total Return & Issuance Recap View PDF
Investors’ demand for equities, namely of the global and thematic variety, has reached an extreme relative to the safety of U.S. Treasuries. It will be ‘global synchronized growth’ for investors in 2021.
Global synchronized growth appears here with 80+% of economies and commodities producing above one-year trend growth. TIPS breakevens have habitually performed well under this scenario, including recoveries from global slowdowns.