State Street Global Advisors has shared with Traders Magazine its2018 Market Outlook titled, Let the Good Times Roll?“in which SSGA outlines the following strategies for investors to position their portfolios in the new year.
Here are some of the highlights:
- Dont Bet Against Bonds in an Evolving Rate Environment-Short rates are poised to rise, but fears of a bond bubble may be greatly exaggerated as growth remains low, term premiums are negative, and inflation remains globally subdued, constraining rates. With tight credit spreads creating an asymmetrical return profile for traditional high yield, investors will need to think differently about how to clip a coupon.
- Look Overseas for Opportunities Arising from Improving Growth-With valuations in the US stretched, more opportunities exist outside the US, supported by improving economic growth, fundamentals, earnings and sentiment, as well as still accommodative monetary policy and a less tenuous political ecosystem.
- Temper Tail Risk Because All Good Times Eventually Come to an End-2017 was the year of low volatility, with the CBOE VIX Index registering more days below 10 than in all of its 26 previous years combined. Episodic high volatility dented sentiment for very brief periods but then receded, the definition of unforeseen risk. The market wants to let the Good Times Roll, but risks beneath the surface could constrain how good it gets.
For the full report, please contact SSGA.
