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Hedging Inflation: A Scorecard 

Aggressive actions by central banks and soaring government budget deficits have raised concerns among some investors that inflation may significantly rise. We examine whether an inflation hedge was worth the cost over the past 13 years.

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Did Bonds Deliver? Leveraging Fixed Income During the COVID Crisis 

Investors may employ leverage with lower-risk asset classes such as bonds to seek higher risk and returns. We assessed the effects of leverage on the returns of three hypothetical multi-asset-class portfolios during the COVID-19 crisis.

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Surging Corporate-Bond Supply: Reason to Worry? 

In the months since the onset of the COVID-19 pandemic, companies issued a large amount of corporate bonds. As a result of this surge, corporate debt has grown substantially — a burden that institutional credit investors may wish to monitor closely.

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US inflation: The market’s implied view 

Dramatic declines in oil prices, the Federal Reserve’s aggressive monetary policy and higher fiscal deficits may create a confusing outlook for U.S. inflation. We examine what the market is telling us about where inflation may be heading.

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How could coronavirus impact credit markets? 

While newspaper headlines are focused on volatile stock markets stemming from the COVID-19 pandemic, credit markets are not immune. Our latest stress test asks, “What would it mean for portfolios if losses reached 2008 levels?”

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Something for nothing? Increasing bond duration may not increase portfolio risk 

Asset allocators may consider lengthening the duration of their bond portfolios to prepare for a potential recession in the U.S. But could duration extension push risk above target thresholds? Maybe not.

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Home bias in fixed income: Has it helped or hurt? 

Has global diversification historically helped reduce risk in the fixed-income portfolios of U.S. defined-benefit (DB) pension plans? Our backtests show that globalizing bond allocations would have increased risk measured relative to a liability benchmark. For such plans, home bias in bond portfolios would have reduced active risk over the period of our study.

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Three scenarios for Fed rate cuts 

A consensus has emerged that the Federal Reserve will lower rates in the coming months, but investors remain uncertain over the timing and magnitude of the cuts. What impact could three rate-cut scenarios have on markets?

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A more politicized Fed? The market yawns 

Could the Federal Reserve Board (the Fed) become less independent, with political forces exerting more influence?

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A new day for monetary policy? 

Listen as MSCI’s Andy Sparks discusses potential implications of the US Federal Reserve’s sharply softening monetary policy, and whether the role of central banks has changed.

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U.S. real yields: opportunities and warning signs 

Despite the recent rally in the U.S. government bond market, real U.S. bond yields (i.e., nominal yield minus the market-implied rate of inflation) still remain substantially higher than at the beginning of the year. This may be both a blessing and a curse for investors.

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Remember, US inflation is a long and winding road 

A remarkable calm has settled upon the U.S. bond market, with interest rate and inflation risk now at their lowest levels of the decade. This optimistic sentiment was underscored at the annual Jackson Hole, Wyoming conference where Federal Reserve (Fed) Chairman Powell highlighted that there is “…no clear sign of an acceleration (of inflation) above 2% and there does not seem to be an elevated risk of overheating.”

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Bonds and equities: still happy together? 

For many years now, stock and bond returns have consistently moved in opposite directions. But the timing of selloffs earlier this year in the bond and equity markets combined with inflation concerns and higher interest rates have market participants asking whether the relationship has changed.

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How easy is it to track a bond market index? 

Many investors may have only a qualitative understanding of the ability of indexed fund managers to track the returns of a fixed-income index. Our analysis uses tracking error to provide a quantitative measure of the ease – or difficulty – of consistently tracking an index.

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Are corporate bonds vulnerable to ECB tapering? 

With employment generally strengthening and inflationary pressures rising, fixed income markets are increasingly focused on central banks tapering bond purchases and ultimately retiring their quantitative easing (QE) programs. Key questions now facing institutional investors include: What has been the impact of the QE programs? How much of this impact could be reversed as the programs are eventually wound down?

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Are convertible bonds more like equities? 

Convertible bonds have “bonds” in their name but in reality they are complicated corporate securities with risk characteristics that often have little to do with straight bonds. Are they more like stocks or bonds? And how can investors evaluate and model them?

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What is the future of the ECB’s corporate bond program? 

With average purchases of €7.8 billion ($8.7 billion) per month, the European Central Bank’s corporate bond buying program (CSPP) has become a major driver in the market. But will the program deliver on a core goal of funneling new lending to the private sector? If not, ECB support for the program could weaken and the program could be scaled back or terminated.

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Analyzing Credit Strategies from a Risk and Return Perspective 

Understanding the performance of credit portfolios is essential in explaining a strategy’s merits to clients and prospects.

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INTEGRATED FIXED-INCOME RISK AND PERFORMANCE ANALYSIS 

Asset managers look at both risk and return in their portfolios. However, it is not always so easy to report and analyze risk and performance attribution on the same platform and along the same dimensions. This type of integrated ex‐ante and ex-post analysis can be carried out in BarraOne, MSCI’s multi‐asset class, multi‐currency, risk and performance analysis platform.