What’s behind the recent rise in US dollar Libor?

We examine the cause of the recent rise and its likely beneficiaries

What’s behind the recent rise in US dollar Libor?

US dollar Libor (London Interbank Offered Rate denominated in US dollars) spiked recently to its highest level in seven years. Typically, US dollar Libor jumps during times of market stress, and/or when the US Federal Reserve tightens monetary policy. However, Invesco Fixed Income believes the recent increase in Libor is due to neither of those circumstances.

What’s going on with Libor?

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Brexit brouhaha: A catalyst for growth-enhancing fiscal policy?

Governments could turn to fiscal stimulus rather than relying on central bank monetary policy

Brexit brouhaha: A catalyst for growth-enhancing fiscal policy?

When contemplating the investment implications of Brexit, it’s worth considering the probability that it proves to be more significant than just the latest reason to become further concerned about the investment outlook. Clearly, this is the short-term perspective. In the longer term, however, it’s possible that Brexit could be seen as an inflection point in terms of policy strategy to address global economic travails. Specifically, fears of further populist rebellion could potentially lead governments to growth-enhancing fiscal policy instead of leaving the burden to central bank monetary policy, where the risk/reward arithmetic of zero and negative interest rate policies looks increasingly tenuous.

Dangerous political cocktail

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Negative quarter in Japan, China accompanied by signs of optimism

Yen rises post-Brexit, while China’s economy takes steps to become consumer-driven

Negative quarter in Japan, China accompanied by signs of optimism

Markets were down in Japan and China in the second quarter. While it appears Japan will continue to show weakness in the short term, there were several bright spots in China that give us cause for optimism.

Yen strengthens post-Brexit

The Invesco International and Global Growth team continues to be strongly underweight Japan. During the quarter, the Nikkei 225 Index was down over 7% when measured by the yen. However, if we consider a US dollar return, the Nikkei was actually up just over 1%.1

So why did the yen strengthen over 8% in the quarter?

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Brexit clouds the international growth lens

We examine the impact Brexit has had on the markets thus far

Brexit clouds the international growth lens

Prior to the Brexit decision on June 23, global economic, financial and geopolitical conditions were fragile and arguably fraught with no shortage of uncertainty. The outcome of Britain’s referendum vote was therefore anything but welcome, catching many by surprise. Since then:

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Emerging market shares gain ground on economic firming and an improved earnings environment

Despite improved performance, valuations are cheap relative to the developed world

Emerging market shares gain ground on economic firming and an improved earnings environment

Emerging markets delivered strong performance in the second quarter, driven by improved economic conditions and stabilized corporate earnings.1 The macro-level strengthening included lower inflation, stable commodity prices, improved current account balances and a reversal in currency depreciation. Assuming an accommodative monetary backdrop, emerging market gross domestic product (GDP) is expected to grow by roughly 4% this year and to accelerate in 2017 — the first acceleration in four years.2

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Embracing the financial technology revolution

How ‘fintech’ can help enhance the investor-advisor relationship

Embracing the financial technology revolution

While the financial services industry is often viewed from the outside as staid and unchanging, the truth of the matter is that a sea change is underway, radically transforming the industry. In many ways, this is good news. Enhanced transparency and a choice of service models may benefit investors. But these changes need to be understood.

The latest buzz is about automated investing — often referred to by its catchier name: robo-advice. I want to give robo-advice its due. The services under this moniker represent a marked improvement over the do-it-yourself approach to investing, which may provide investors with the means to invest, but with limited guidance as to where.

As a believer in innovation, I place high value on the power of new technology. For many investors, I believe a financial advisor remains the better option versus a fully automated approach, but better still is an advisor who embraces technology for what it is — a tool to better serve his or her clients.

How technology can help advisors serve investors

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Alternative assets: Examining opportunities in infrastructure

We look at the key reasons for gaining exposure to this expanding alternatives subcategory

Alternative assets: Examining opportunities in infrastructure

Invesco’s alternative framework, shown below, identifies five common investment objectives and aligns them with five types of alternatives that Invesco believes can potentially help investors achieve those objectives. In this blog, I’d like to focus on alternative assets, particularly the infrastructure subcategory.

Invesco’s alternatives framework: Aligning client objectives with different types of alternatives

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Framework applies to liquid alternatives and nonaccredited, retail investors. There is no guarantee the strategies will be successful.

It is not unusual for investors seeking inflation protection to invest in alternative assets. Furthermore, there are several types of alternative asset investments that have the potential to generate attractive levels of current income. The two best-known examples are real estate and commodities. Infrastructure and master limited partnerships (MLPs) are also examples of alternative assets that have the ability to generate income.

An introduction to infrastructure

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Equities post gains amid mixed economic backdrop

Despite a firming US economy, risks remain both here and abroad

Equities post gains amid mixed economic backdrop

Earnings season is upon us, when companies reflect on the past quarter and fine tune guidance based on their outlook for the rest of the year. So, it seems an appropriate time to take stock of some of the larger economic trends we’re seeing, both stateside and abroad.

As we move into late summer, investors face a mixed landscape of opportunity and hard-to-quantify risks. While there are signs of economic revival in the US and emerging world, historically low global interest rates are a reminder of persistent risks — including geopolitical instability, monetary policy, the US elections, Brexit and unstable European banks. Nonetheless, strong year-to-date equity performance in many parts of the world could make the case for equity exposure, even in the face of global uncertainty.

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Strong, but not strong enough. No rate hike for now.

Citing a strengthening labor market and soft business investment, Fed leaves rates unchanged

Strong, but not strong enough. No rate hike for now.

As expected, the Federal Reserve left policy unchanged at its July meeting and laid the groundwork for a future rate hike – noting a stronger labor market and moderate growth in economic activity.

FOMC: Near-term risks to economy have diminished

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Brexit aftershocks: How exposed are convertible securities?

Following recent market turmoil, we answer investor questions about convertibles

Brexit aftershocks: How exposed are convertible securities?

In the market turmoil that followed the UK’s recent vote to exit the European Union (EU), the Invesco Convertible Securities team received a number of investor inquiries regarding the convertible asset class in general and our fund in particular. Investors have been interested to know about exposures to foreign markets and economically sensitive sectors, volatility and liquidity. Below we address the most frequently asked questions we’ve received about convertible securities, or “converts.”

How much international exposure does the US convertible market have?

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