Coronavirus: mapping the impact

How did bond ETFs fare during the COVID-19 market correction?

The dramatic expansion in valuations since March has been highly polarized across global markets and sectors, raising important allocation considerations for investors.

The positive uptrend in EPS expectations since spring has stalled amid rising Covid-19 lockdown risks. Could markets be headed for a second wave of downward revisions?

Among our global factors, Size has been particularly sensitive to the shifting economic winds buffeting equity markets since the outbreak of the coronavirus this year.

The Bank of Japan faces daunting policy challenges in the post-COVID world.

Despite taking a bigger hit in the March meltdown, US stocks have handily outperformed international counterparts so far this year.

We took a close look at how US markets performed in the wake of the past five presidential elections. The conclusion: It's the economy matters more than outcome

Germany's equity markets are more diverse than is recognized.

Auto stocks - long seen as a relic of an ailing industry - are outperforming all other sectors.

US mortgage-backed securities have not suffered the existential disaster of the Great Financial Crisis, but there are indications of difficulties

Elevated equity valuations are raising concerns. But digging deeper into PE multiples at the sector level and taking relative perspective reveals some interesting insights.

The strong positive turn in EPS revisions since June helped power this summer's risk rally. But the recent slowing in this leading indicator is now flashing amber warnings signals for markets.

It's best not to read too much into the recent acceleration in money growth without also monitoring the drivers of money velocity and aggregate economic demand.

Back in June, we published a blog examining how the first 100 days of the pandemic had impacted the CMBS market. We found that while the entire CMBS market had suffered a sharp decline at the onset of the pandemic, at the 100-day mark some real estate sectors were showing signs of recovery. If we look at the latest numbers, we can see that while some flickers of bright spots remain, the outlook for the CMBS market has become increasingly uncertain as spikes in COVID-19 cases persist throughout the US.

The post-lockdown risk rally has brought unusually wide valuation spreads across global markets, with the gap between expensive and cheap US stocks exceeding that of the TMT bubble peak.

How has the liquidity of US corporate bonds fared since the coronavirus crisis?

To examine the uptick in sustainable investments and better understand the growing interest in smart sustainability, earlier this year we surveyed 139 global asset owners, gauging their evaluation and adoption of these strategies.

Renewed optimism over the EU’s handling of the virus, the ECB’s upgraded QE programs and the joint COVID-19 stimulus fund fueled a strong rally in riskier European debt and tightened yield spreads over Bunds.

Only long-dated UK gilt yields are meaningfully above zero now, placing them in the negative yield club of major government-bond markets. It appears that UK gilts have largely escaped the gravitational pull of US Treasuries.

Alongside the recent collapse in G7 bond yields, as the Covid-19 crisis has developed, Chinese government bond yields have backed up in recent months, reflecting PBOC caution in cutting interest rates.

The drivers of the recent record-breaking upsurge in gold can be mined for valuable market insights.

Since COVID, it's been the best of times and the worst of times for US leisure stocks

The causes and ripples effects of the US dollar downdraft in July

Is COVID-19 a hurdle or a ramp for more climate-based investment?

The skyward flight of US valuations continued into July, with forward PEs near 15-year peaks, posing a headwind to further gains in returns.

In an unusual twist, emerging market sentiment has decoupled from that of developed peers. What's that all about?

Quality and Profitability market factors have continued to lead US equity markets this year, despite a brief rally in Size during the second quarter, according to the recent factor insights from global index provider FTSE Russell.

FTSE Russell Head of Canada Paul Bowes and FTSE Russell Director of Fixed Income Research Robin Marshall recently spoke to Canada clients and the news media about the Canada fixed income markets. In a program entitled “Looking Through the Apocalypse: Canadian fixed income, QE and economic recovery.”

The Quality factor remained dominant in Q2 despite the robust rotation into riskier smaller cap (Size), as defensive undercurrents persist.

Despite a return in risk appetite in the second quarter, long duration government bonds have remained the top performing fixed income asset in 2020.

Signals of extreme market confidence or fear have proved helpful in gauging contrarian turns in equity markets.

Viewed under a broader set of measures, US valuations look far less elevated than many may think.

The COVID-19 crisis has impacted asset valuations, increased volatility and led to reduced liquidity in many cases. Most asset classes have been affected, and governments have stepped in to support financial operations. In this paper, we examine the effects of the crisis on the year-to-date liquidity of USD corporate bonds, as measured by the price liquidity ratio.

The ebbing flow of negative EPS revisions puts a positive light on consensus expectations for a sharp global recovery next year.

Despite the appearance of some normalization in the US housing market, a close examination suggests a number of COVID-19 related structural challenges.

How has CMBS performed since COVID-19?

Credit markets extended the April rally in May, with spreads narrowing further versus government bonds, driven by renewed risk appetite, and central bank QE programs. But there is a notable divergence in the performance of Canadian investment grade and high yield spreads in 2020...

Growing optimism fuels a strong rotation into riskier Size and Value factors in May, denting enthusiasm for defensive Low Vol and Quality.

US small caps have been the biggest beneficiaries of the global risk-on rally as economies begin to reopen.

Global equities continued to rally in May, and US stocks led the way. The scale and concentration of top-performing US sectors explain this outperformance.

Philip Lawlor, MD Global Markets Research, draws upon key observations from the recently published 'Market Maps' Monthly Performance Report to discuss different perspectives of the Covid-19 impact, why US equities have outperformed in the risk rally, R1000 and R2000 performance, REIT and Environmental Opportunity index performance, factor rotation and correlation analysis.

EPS-boosting buybacks have played a major role in supporting equity prices in the US. The pandemic threatens to put that on hiatus.

PE multiples have fully recovered from their March lows, as markets look past today's bleak economic terrain to the brighter post-lockdown days ahead. But have they gotten ahead of themselves?

This week, Philip Lawlor, MD Global Markets Research, reviews key data points from the Market Maps Equity Market Drivers report to provide insight into the impact of debt financing on recovery, what’s happening to the EPS cycle, diminishing prospects for dividends and buybacks, and elevated valuations.

The COVID-19 crisis could be a boon for smart sustainability strategies

This week, Philip Lawlor, managing director, Global Markets Research, FTSE Russell provides perspective and analysis on global bond markets.

Financial conditions have eased substantially in the US, UK and Canada. Why is there such a marked difference in the development of financial conditions?

Global credit markets rode a resurgence in risk appetite in April, bolstered by Fed and ECB plans to extend asset-buying programs to include lower-grade debt. But credit challenges remain.

Among alternative indexes, those focused on environmental and social themes performed best in the April rally and the year so far, with the US ahead of its global counterparts.

Philip Lawlor, MD, Global Markets Research examines the recovery in risk appetite, why US equities dominated global equity market returns, notable differences in sector weighted performance contributions across the regions, performance of alternative indices and more.

With their respective overweight in outperforming technology and healthcare stocks, the Russell 1000 and Russell 2000 lead the way in the global equity relief rally in April.

As attention starts to shift towards when and how the lockdown exit will be implemented, there are a litany of important questions and themes that needs to be considered in a post-lockdown world.