Entries filed under 'Financial Markets'

    Bond Funds: Solid Answers to Key Liquidity Questions

    September 24, 2015 11:55 AM by Andrew H. O'Brien, CFA

    A recent press report suggested that 10 large corporate-bond funds' holdings of illiquid securities exceeded regulatory maximums. Here's what the article gets wrong.

    A Wall Street Journal article published Tuesday, September 22, 2015, analyzed the liquidity of corporate bond holdings of a number of large fixed-income mutual funds as part of the newspaper’s series on bond mutual funds and its concerns about bond market liquidity. 

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    The Chinese Correction: The Case for Calm

    August 26, 2015 10:20 AM by Zane Brown

    Investor fear recently reached levels not seen since 2008. That’s not justified by current U.S. economic conditions.

    In an earlier blog post, Milton Ezrati, Lord Abbett Partner, Senior Economist and Market Strategist, addressed current investor fears about China’s slowing economy, and why those fears are overdone. We thought it would be worthwhile to look at recent history to put those fears into context.

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    Equities: A "China Syndrome" Sequel? Not Quite

    August 24, 2015 10:12 AM by Milton Ezrati

    The sell-off in U.S. stocks in response to reports of a weakening Chinese economy shows that investor emotions have gotten ahead of reality.

    The U.S. equity market's recent selloff seems to have its roots in an exaggerated, indeed panicked, response to negative news out of China. A recent Economic Insights on the Lord Abbett website explains in detail why such interpretations are erroneous. The equity rout in China, though severe, is an entirely unsurprising response to the market's previous and unsustainable run-up during the previous year.

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    Trying to Predict the Market? Tune Out the Equity Strategists!

    November 4, 2014 11:50 AM by Brian Foerster

    Even before the recent pullback, the market was lagging the growth in earnings. 

    Volatility has returned to the stock market, causing concern in some quarters. But this seems to be an overreaction, given the relative strength of the U.S. economy and the fact that even at the recent low of 1,862 in mid-October the S&P 500® Index was still slightly up for the year. Since then, it has rebounded to a new high. (Although, due to market volatility, the market may not perform in a similar manner in the future.)

    More important, investors need to view the recent volatility in a longer-term context. Two key statistics are worth noting: 1) annualized return and 2) average earnings growth.

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    Bonds: Geopolitical Risk Rears Its Head

    July 18, 2014 2:30 PM by Zane Brown

    Developments in Ukraine and the Middle East sparked volatility in fixed-income markets on July 17. Here’s a look at the implications for investors. 

    Geopolitical risk, which largely has been brushed aside by the fixed-income market in 2014, seized the spotlight on July 17. News of a downed Malaysian airliner in Ukraine, and military incursion by Israel into Gaza, fueled a “flight to quality” trade that pushed U.S. 10-year Treasury prices higher and yields lower. The yield on the 10-year note touched 2.44% on the session, matching the low for 2014 (all data on bond yields and spreads in this post are from Bloomberg). High-grade corporate bonds also benefited, as investors redirected assets toward higher credit-quality securities. 

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