Tariffs, earnings and politics: What’s moving markets this week?

Weekly Market Compass: Global summits and key data releases top the list of what to watch

Time to read: 7 min

There is no shortage of events to watch this week: The European Union and China will meet to discuss foreign investment, Russian President Vladimir Putin and US President Donald Trump are meeting in Finland, and US Federal Reserve Chair Jay Powell gives his semi-annual testimony to Congress. But can any of these events direct the market’s attention away from the strong second-quarter earnings season?

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Convertible securities: What does the speedy pace of issuance mean for investors?

New issues mean new opportunities

Time to read: 2 min

May was the busiest month for convertible security issuance in the US market in almost four years — 21 new deals were completed, generating nearly $9 billion in proceeds for issuing companies.1 While the recent torrent of new issues could put some pressure on valuations in the convertibles market, the Invesco Convertible Securities Team believes this pickup in issuance is a healthy development for the asset class overall, as it gives active managers such as ourselves the ability to pursue new investment opportunities.

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Five risks that could affect fixed income markets

Macro and credit fundamentals look strong, but greater volatility appears likely

Rob WaldnerTime to read: 5 min

Invesco Fixed Income is positive on fundamentals for the rest of this year. Global growth is solid and inflation is tame. As central banks have pivoted away from stimulus, tighter financial conditions have hurt risky assets. But major central bank policies are still generally easy — we expect the Federal Reserve to tighten gradually, and the runway for other central banks to normalize policy is still long. Nevertheless, political uncertainty, trade tensions and a sell-off in emerging markets have challenged investors in recent months. We expect these factors to generate further volatility and believe caution is warranted. However, we believe greater volatility will generate new opportunities for fixed income investors against a backdrop of solid macro and credit fundamentals. Below are five risks we are monitoring.

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Six issues driving global markets

Weekly Market Compass: Examining trade tensions, job reports and the concerns of the Federal Reserve

Time to read: 5 min

As I write this early on July 9, global stocks have hit a two-week high1 and the price of copper is rallying. Markets are clearly focusing on positive data at the moment, which is a welcome change. Below, I highlight six important things that happened last week — both positive and negative — and several upcoming issues to watch.

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Interest rate outlook: US inflation should peak this summer, resulting in one more 2018 hike and then a pause

Invesco Fixed Income shares its views on rates around the world

Rob WaldnerTime to read: 3 min

US:

Neutral. US growth remains strong, accelerating in the second quarter versus the first quarter’s lackluster 2.2% performance.1 We expect 2018 growth of around 2.8%, with strong contributions from capital expenditures and consumption. Core inflation continues to be benign, and we see it peaking in the next two months at around 2.2%. After that, softer rental and service costs should drive it back below 2%. In our view, the US Federal Reserve will hike one more time this year before pausing in response to declining inflation. Strong growth and lower-than-expected inflation point to a 10-year Treasury yield of around 3%. However, supply dynamics will likely begin to shift in the third quarter as the Treasury begins to issue more long-term debt. This may pressure the Treasury yield curve steeper.

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Currency outlook: US dollar volatility could become a concern as global central banks remove stimulus

Invesco Fixed Income shares its views on currencies around the world

Time to read: 2 min

US dollar:

Underweight. We expect the strong global growth environment to drive the US dollar weaker over the long term. Global monetary policy should converge as the US Federal Reserve (Fed) nears the end of its tightening cycle and other major central banks begin to normalize. As this occurs, volatility in the US dollar could become a concern, as the Fed is likely to remain consistent in its tightening path while other central banks navigate the early stages of removing monetary stimulus.

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Six ways the trade situation deteriorated in the past week

Weekly Market Compass: Administrations and corporations continue to respond to Trump’s tariff plans

Time to read: 3 min

I keep promising myself that I will stop writing about trade and protectionism in my weekly commentaries. And then virtually every week, something happens that forces me to address the topic once again. This past week, unfortunately, was no exception. In my mid-year outlook, I mentioned that my outlook is predicated on the trade situation not worsening materially — so it’s important that we closely follow trade developments. Last week, there were six trade developments that are helping to place downward pressure on stocks:

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Why should investors consider alternatives?

Explaining the basics of alternative strategies

Time to read: 2 min

Alternative investments (alts) were first embraced by institutions, and some people still view them as a complex solution for complex needs. However, a growing number of alternative strategies are now available via mutual funds. This allows alts to be used by everyday investors to help meet three of their most common investment objectives: building wealth, preserving wealth and providing income.

Why use alternatives?

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What’s in store for markets in the second half?

Weekly Market Compass: Five trends to watch for during the remainder of 2018

Time to read: 6 min

We are coming to the mid-year point for 2018, and the past six months have felt like six years. Markets have experienced a significant uptick in volatility, yet equity investors may not have much to show for all their troubles. Year-to-date performance as of June 22 shows many major indices in the red: the MSCI All Country World ex USA Index lost 3.53%, the MSCI EAFE Index is down 3.43%, and the MSCI Emerging Markets Index lost 6.08%. One of the few exceptions is the S&P 500 Index, which is up a modest 3.04% for the same period.1 What happened? And what are markets telling us about the global economy?

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A new generation of nontraditional REIT opportunities

Infrastructure, data centers and timber REITs are growing in importance

Time to read: 4 min

When most investors think about traditional real estate investment trust (REIT) investment opportunities, they often think about the “four major food groups” of real estate — the retail, office, residential and industrial sectors. While these sectors continue to be a major component of REIT investing, they are increasingly being joined by nontraditional REIT sectors. Our growing reliance on technology and changing demographics are leading to new opportunities in three nontraditional REIT sectors: infrastructure, data centers and timber.

A changing picture of the REIT landscape

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