Three reasons to consider convertibles now

Equity volatility, the prospect of rising interest rates and an uptick in issuance may bode well for the asset class

Time to read: 3 min

After trailing US stocks in 2017,1 US convertible securities outperformed during the volatile first quarter of 2018. Given the prospect of further market volatility, the expectation for rising interest rates and a recent pickup in convertible issuance, the Invesco Convertible Securities team has a favorable outlook for this asset class in the near to medium term.

Convertibles may withstand equity volatility

A convertible security is a corporate bond that has the added feature of being converted into a fixed number of shares of common stock. Therefore, convertibles have the ability to


Five takeaways from April and five things to watch in May

Weekly Market Compass: Tariffs, economic growth, central banks and more

Time to read: 5 min

As April comes to a close, we learned some key lessons this month about the likely path forward for central banks, the growing concerns about protectionism, and the market’s sensitivity to any changes in key indicators. Below, I highlight five key takeaways from April, and preview five things to watch in May.

Five takeaways from April


European equities may benefit as cycles diverge

Europe looks more fairly valued than the US, and has good earnings potential

Time to read: 2 min

Markets around the world experienced the return of volatility during the first quarter of 2018, as central banks tightened policy and the specter of a trade war grew. Despite these pressures, the European market may offer the most opportunity.

Notwithstanding the well-publicized Brexit negotiations and a coalition stalemate in Italy following that country’s March elections, I can’t recall political risk in Europe being this muted for a long time.  And, while I believe we’re in the very late innings of the US bull market, an argument could be made that Europe is in a different stock market cycle, without the same level of froth and extreme valuation.1


Yield signs: Deconstructing a key market indicator

Weekly Market Compass: What does the recent jump in the 10-year US Treasury yield mean for markets?

Time to read: 5 min

The biggest news of last week was not a tweet, but a Treasury yield — specifically the 10-year US Treasury yield, which rose significantly last week, to 2.95%.1 As of this writing on Monday, the 10-year Treasury was yielding 2.98%, very close to the key 3% level it has not seen in more than four years.1 But what is this key market indicator telling us? And why do people care?

Let’s start with the second question first; people care for a number of important reasons.


What’s up with US dollar LIBOR?

The widely quoted benchmark rate is now at post-crisis highs

Time to read: 4 min

The last time we wrote about the US dollar London lnterbank Offered Rate (LIBOR) was in 2016, when the spread between LIBOR and the Overnight Indexed Swap (OIS) rate increased due to market dislocations leading up to US money market fund reform. Now in early 2018, we have seen LIBOR rates rise and LIBOR-OIS spreads widen again, causing us to ask the same question — what’s up with LIBOR?

In our opinion, there are three factors driving LIBOR rates higher:


Trade talk tempers Asian market optimism

Quality and valuation may become more important to investors if volatility continues

Time to read: 3 min

Investors began 2018 with a generally optimistic view, but this euphoria faded by quarter-end as protectionism and talk of a US/China trade war became a key concern. Despite investor pessimism, we expect further volatility might create the opportunity to invest in high-quality Asian equities at lower valuations.

Pre-negotiation posturing

Market volatility spiked as US President Donald Trump started delivering


Artificial intelligence: What is it, and why are companies adopting it?

Predictive analytics is transforming large data sets into actionable items

Time to read: 3 min

Technology companies are known for innovation, and it doesn’t take long for a revolutionary new technology to take hold and become a part of people’s daily lives. In my view, investors shouldn’t be threatened by technology. Rather, they should be skeptical of companies not utilizing technology to its fullest potential.

One common theme we find when considering the largest companies within the Nasdaq-100 Index is the early embrace of artificial intelligence (AI). Even the chief executive officer of Alphabet (the parent company of Google) acknowledged the importance of artificial intelligence in the company’s first quarter 2016 earnings call.1 While not all companies


Hitting ‘the number’ in retirement

Your portfolio balance, your budget and your lifespan are all critical inputs into your retirement plan

Jack TierneyTime to read: 3 min

I’m going to hit the number this year — the one that people often associate with retirement. To be clear, I am not retiring this year, but when retirement is closer than it used to be, there are a few more numbers that command your attention. There’s your portfolio balance: the investments, savings, and IRA/401(k) balances that you’ve been building up all these decades. There’s the amount of money you pull from your portfolio each year for your expenses. And then there’s the number of years you need your money to last.

Number 1 – Your portfolio

While you are working, you contribute to your IRA or 401(k), maybe with a company match; if the markets are flat or up,


Geopolitical tensions impact more than just stocks and bonds

Weekly Market Compass: Missile strikes and sanctions affect prices of oil, aluminum and more

Time to read: 4 min

The last week has seen a flurry of geopolitical events — from US sanctions on Russia to missile strikes on Syria — that have affected the prices of various commodities as well as some currencies.

Missile strikes in the Middle East

First of all, there are growing problems in the Middle East.


Looking for quality growth in a volatile world

A weak 1Q rattled investors, but we welcome the opportunity to find quality companies at attractive valuations

Time to read: 3 min

Early this year, concerns over higher inflation and interest rates led to a rise in volatility, and global equity indices ended the quarter down in most markets. However, despite the weak start to 2018, the Invesco International and Global Growth team sees positive signs among a number of important Earnings, Quality and Valuation (EQV) measures. The recent spike in volatility is a welcome development for investors like ourselves who emphasize valuation as a critical input to risk and return potential.

The quarter in review

In dollar terms,