Weekly Market Recap
Week in review
- ANZ job adds declines 10.3% m/m
- Housing finance done 1.7%m/m
- RBA financial stability review
- NAB business confidence
- Westpac consumer confidence
- Australia labour market report.
Thought of the week
Spreads have started to narrow in the U.S. investment grade bond market as investors lean into the Federal Reserve’s (Fed’s) decision to buy corporate bonds. However, the Fed is likely to focus on the strongest rated bonds amongst the high grade market, leaving a question over the securities just above the line being considered junk. The chart below looks at those bonds, the fallen angels that are downgraded from investment grade to high yield where there has been a rise in the market value as more companies are downgraded. Downgrades, or expected downgrades, can create forced selling by institutional investors and add further pressure on lower rated investment grade bonds. While this cycle persists, fixed income investors will need to focus on quality of the bonds they own.
Fallen angels on the rise
Market capitalization of the U.S. High Yield Fallen Angel Index, $bn
JPMorgan Global Research Enhanced Index Equity Fund
To achieve a long-term return in excess of the benchmark by investing primarily in a portfolio of companies, globally; the risk characteristics of the portfolio of securities held by the Sub-Fund will resemble the risk characteristics of the portfolio of securities held in the benchmark.