And lastly, dwindling spare capacity within the group means that a faster production increase would reduce that spare capacity even more. With limited spare capacity and low oil inventories, we reiterate our positive price outlook and continue to advise risk-taking investors to add long positions in longer-dated oil contracts in Brent, or sell Brent’s downside […]
When yields started to rise in August 2020, virtually all Treasury bonds offered a yield of 1% or less; yields have more than tripled since then, offering significant opportunities for investors. The 2-year / 10-year Treasury yield curve inverted in April, and the first estimate of Q1 US GDP showed negative real economic growth. By […]
In times like these, we feel a strong urge to do something— anything—to gain control over the situation. Unfortunately, when it comes to investment adjustments—especially those in reaction to markets—most decisions are bad decisions. Even when higher turnover does lead to higher returns, it also results in higher taxes and transaction costs—so you would expect […]
With equity markets likely to remain volatile, we suggest positioning toward areas of the market that can perform well in an environment of high inflation, rising rates, and elevated volatility. The VIX index of implied US stock option volatility is trading above 30 again. Recent commentary from Fed officials has been increasingly hawkish, and the […]
There are times when equities and bonds correlate, resulting in negative returns for 60/40 portfolios. Persistently high inflation, war in Ukraine, and a hawkish Fed have so far proven to be an acid cocktail for 60/40 portfolios. Rising commodity prices come at a time when inflation is already high, putting more pressure on the Fed […]
But we don’t think the rally in broadly diversified commodities is over. With only two countries in the OPEC+ alliance holding significant spare capacity , the group is sticking to a cautious approach in unwinding pandemicrelated production cuts. The US fracking industry, another potential source of oil in the short run, is struggling to increase […]
Total return on the ICE BofA HY index was –0.92% in March, a third consecutive month of negative return this year. HY spreads had widened from 378bps at the end of February to 422bps on 15 March, only to crash back down to 334bps by early April, surpassing the spread before the onset of the […]
In light of equity market volatility, CIO highlight their highest conviction thematic equity ideas over a six- to 24-month time horizon. While we believe a more balanced approach is appropriate given the likelihood of a slowdown in business activity, we think it is premature to adopt an outright defensive stance. The path of the market […]
Scarcity of US coal, also driven by strong demand from abroad, has pushed US coal prices to the highest level since 2008, which will likely support natural gas power burn this summer despite the high prices. Still, we expect higher production, driven by the Permian and Hayensville shale basins, as well as higher associated gas […]
System-level thinking is a way to view a problem as a series of complex, dynamic, and interrelated relationships impacting one another both directly and indirectly. Increasing inclusion of marginalized communities by creating economic opportunities enables them to participate and contribute to the economy to the fullest of their personal potential. This is because the benefits […]
Fixed income markets are pointing to pessimism over the economic outlook, with the yield on 2-year US Treasuries rising above the 10-year yield in late March. However, volatility can also provide a more attractive entry point for long-term themes , such as 5G and smart mobility, or for select beaten down stocks. It is important […]
The financial media has been abuzz with recent movements in the bond market. The yield on the 10-year Treasury rate has moved up dramatically this year from 1.5% at the end of last year to 2.3%. This brief inversion generated alarm bells for some because a 2-year/10-year inversion has preceded every recession since the 1970s. […]
In our central scenario, energy prices stay elevated in the coming months before retreating through the second half of the year, which would be consistent with a cease-fire in the war and a cooling of rhetoric between NATO and Russia by the summer. Given the current uncertainty, rather than make a strong overall directional call, […]
This page contains the latest UBS commentary on the war in Ukraine. It is important that you understand the ways in which we conduct business, and that you carefully read the agreements and disclosures that we provide to you about the products or services we offer. Wealth management services in the United States are provided […]
On 10 March 2022, CoreLogic released its 4Q 2021 Homeowner Equity Insights report. As the data here indicates, 92% of the approximately 54 million 1-4 family mortgages have a loan-to-value below 80% with 48% possessing an LTV below 50%. In addition, although we expect the rate of HPA to slow, the dearth of available supply […]
Headlines remain fast changing. But sentiment improved early Friday after news Secretary Blinken had agreed to meet Russian foreign minister Sergei Lavrov next week. The European Union would also suffer sizable consequences, given that Russian energy accounts for nearly 40% of its gas imports and 30% of its oil imports. As such, investors with diversified […]
Traders now expect between four and five US rate hikes this year, beginning in March. The January release of the Federal Reserve’s Senior Loan Officer Survey Opinion indicates a very modest tightening in standards, albeit broadly level with standards seen since the global financial crisis and well below the tightening seen at the start of […]