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Language Notification

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

bond-market-monthly-staycation

Perspectives

Bond Market Monthly: Staycation – Summer Edition

Kris Xippolitos

By Kris Xippolitos

Head - Fixed Income Strategy

July 29, 2020Posted InFixed Income and Investment Strategy

The “staycation” has become somewhat familiar to many of us. Whether personal or based on travel limitations, vacations at home have become quite common. Following the fastest market correction in history, and the extraordinary policy response that quickly followed, US rates have also decided to take a long holiday. Indeed, yields on 10-year US Treasuries (UST) have traded sideways since April, averaging 0.65%. The steepening of the yield curve has also stalled, with the yield difference between 3-month T-Bills and 10-year UST flat-lined at 50bp. Though the UST market has gained a healthy 9.5% in 2020 (thru July 28), only 90bp of return has come over the last four months. 

Looking ahead, US rates are likely to face several obstacles. The path of COVID-19 will continue to weigh on investors’ minds, with the acceleration of infections slowing reopening’s and suppressing consumer demand in the effected cities. Additional fiscal stimulus faces uncertainties over timing and size, contributing to investor restraint. The US Presidential election may require markets to discount issues like higher corporate taxes or infrastructure spending. Of course, let’s not forget Fed policy. Zero policy rates and purchases of Treasury and mortgage bonds have pushed real yields down sharply and has suppressed rate volatility. 

We continue to favor portfolio positioning down in quality. We believe it’s where the value lies. This holds true whether its US municipals, high yield bonds or in structured credit. However, there is a big difference between moving down in quality and over-reaching for yield. We express caution on the latter. We advise being selective and utilizing an active approach. Our strongest convictions are in “Fallen Angels”, non-agency residential mortgage bonds and lower-rated investment-grade. Preferred stock and parts of the emerging markets also offer good value.

Read Bond Market Monthly