Impending Default Cycle Makes Corporate Bonds High Risk, Newton Says

The video discusses the rapid equity recovery and its impact on the bond market, highlighting the tactical increase in exposure to high yield and emerging markets. It explores the potential for defaults in 2019 and the varying risks associated with different fixed income assets. The discussion also covers recession risks, with differing views on the likelihood of a recession, and the role of the Fed funds rate in shaping investment strategies. Finally, it examines opportunities in emerging markets, emphasizing the need for selectivity in light of potential economic slowdowns.

What was one of the reasons for the panic sell-off at the end of the previous year?

• High interest rates

• A build-up of cash on the sidelines

• Increased government spending

• Strong economic growth

Which type of risk assets are more influenced by US rate forecasts?

• High yield bonds

• Leveraged loans

• Emerging markets

• Corporate bonds

What does the treasury market currently indicate about the economy?

• A recession is imminent

• A growth slowdown is likely

• Economic growth is accelerating

• Interest rates will decrease

What is a key determinant of performance in emerging markets?

• Global oil prices

• Fed rate cycle

• US tax policy

• European economic growth

Why is it important to be selective in emerging market investments?

• All emerging markets have the same risk level

• They are unaffected by global growth trends

• Some are more vulnerable to economic slowdowns

• Interest rates are uniformly high