Andy Sparks is a Managing Director and Head of Portfolio Management Research. Previously, Andy was responsible for Fixed income Research Strategies. Prior to joining MSCI, he was Head of Product Management at Barclays Capital for the POINT portfolio analytics platform. He had joined Lehman Brothers in 1995, serving in a number of senior positions. Andy has an M.A. in Economics from the University of Chicago and a B.A. in Economics from UCLA.
Research and Insights
Articles by Andy Sparks
US Default Could Leave Investors Nowhere to Hide3 mins read Quick Take | May 24, 2023 |
The market-implied probability of a U.S.-government default this week shows that investors still view the possibility of such a default as a tail event. But the consequences of a default could be severe and long-lasting.
Default in Our Stars?Podcast | May 18, 2023 |
As discussions continue in Washington, D.C., we examine how markets have handled the uncertainty so far, how such showdowns played out in the past and three “what if” default scenarios.
The CDS Market’s View on US Default7 mins read Blog | May 9, 2023 |
There is growing investor concern that the U.S. could default on its debt obligations. As the debt-ceiling debate heats up, we look at the spreads of credit-default swaps as a measure of the U.S. government’s creditworthiness.
Banks Have Investors Feeling Déjà vu All Over AgainPodcast | Mar 23, 2023 |
Banks failing, another sold and governments stepping in to backstop the fallout. Add to that a global economy coping with high inflation and still shaking off the COVID-19 cobwebs and, on top of that, regularly scheduled meetings for two major central banks. Our panel of MSCI experts helps put these events into context for investors managing multi-asset-class portfolios.
Will the US Government Default?4 mins read Blog | Mar 2, 2023 |
The debt-ceiling debate has heated up in Congress, and the U.S. government’s ability to borrow could be exhausted sometime between July and September. But what does the market for credit-default swaps say about the likelihood of U.S. default?
The Russia-Ukraine War and the Markets: One Year LaterPodcast | Feb 23, 2023 |
While the direct market impact of Russia’s invasion has lessened over time, there have been longer lasting effects that have exacerbated investor concerns around inflation, rising rates and central bank actions around the globe. We examine the issue through a multi-asset-class lens.
Global Markets One Year After Russia’s Invasion of Ukraine11 mins read Blog | Feb 21, 2023 |
Markets have partially recovered since Russia invaded Ukraine, but questions remain about inflation, economic growth and central banks’ actions. Understanding last year’s performance across asset classes, may help with investment decisions in 2023.
Three Scenarios for Fed Policy, Inflation and Growth4 mins read Blog | Dec 15, 2022 |
Despite two months in a row of unexpectedly low inflation, the Fed once again raised rates this week. Amid considerable uncertainty over inflation and rate policy, we analyze three scenarios for the U.S. economy and their impact on diversified portfolios.
Inflation, the Fed and the Rocky Road Ahead2 mins read Quick Take | Dec 8, 2022 |
Good cheer currently prevails in the bond market, as unexpectedly low inflation triggered one of the sharpest rallies of the past several years. But what does the Treasury market expect for inflation and the Federal Reserve’s rate policy in the coming months?
The Fed Post-Election: Inflation Still the Focus2 mins read Quick Take | Nov 10, 2022 |
The U.S. midterm elections appear to have given strong support for the Federal Reserve to continue its aggressive campaign of rate hikes, as exit polls showed inflation as a top issue among voters. But what do markets say about expectations for inflation?
Market Crowding Contributed to UK Gilt Turmoil2 mins read Quick Take | Oct 27, 2022 |
Analysis of the recent turmoil in the U.K. gilt market has primarily focused on the role of leverage and liquidity. However, investors also may want to consider the role played by bond-market crowding, and where similar conditions may exist.
Chaos in U.K. Bonds: Could it Happen Elsewhere?2 mins read Quick Take | Oct 3, 2022 |
Dramatic moves in U.K. government bond yields and a weaker pound underscore the difficulties facing investors in the current environment. Global investors have started to consider whether other countries could experience similar events.
The 60/40 Portfolio Is Sick. Can It Recover?2 mins read Quick Take | Sep 21, 2022 |
This year’s abysmal performance of the 60% equity/40% bond portfolio raises fundamental questions about the role of bonds in multi-asset-class portfolios. Are bonds still a source of diversification?
Central Banks Add Muscle to the Inflation Tug-of-WarPodcast | Sep 8, 2022 |
We explore the sometimes volatile, push-pull relationship between investors and central banks as each looks to navigate extreme inflation in the U.S., the eurozone and the U.K.
Deteriorating Liquidity Complicates Fed Action2 mins read Quick Take | Aug 26, 2022 |
During the early days of COVID-19, Chair Powell partly justified the Fed’s asset purchase program as necessary to restore market liquidity. Today, it seems quite plausible that Treasury market liquidity may soon be worse than during the pandemic.
Has the Bond Market Gone Crazy?2 mins read Quick Take | Aug 11, 2022 |
Signals from the bond market show what some investors consider a remarkably optimistic inflation outlook.
Fed Chair Powell: See You in September2 mins read Quick Take | Aug 3, 2022 |
Federal Reserve Chair Jerome Powell continues to talk tough on inflation, and Federal Open Market Committee members project the federal-funds rate to rise above 3% by year’s end. But what does the market say?
Has Inflation Affected the Bond-Equity Relationship?2 mins read Quick Take | Jun 21, 2022 |
The sharp rise in inflation over the past year and a half, combined with growing concern over the U.S. economy’s strength, may prompt investors to rethink basic assumptions underlying portfolios comprised of bonds, equities and other asset classes.
ECB, FOMC, Find Out What it Means to MePodcast | Jun 16, 2022 |
As inflation continues to plague the EU and U.S. central bankers announced their latest moves to fight back. MSCI experts join us to discuss policymakers’ options and a range of scenarios investors can consider to help safeguard their portfolios.
Russian Bonds: Rolling Back the Default Clock4 mins read Blog | May 4, 2022 |
The Russian government’s decision on April 29 to pay holders of two dollar-denominated Russian sovereign bonds led to a major rally, encouraging some investors that Russia may avoid default. There are, however, more challenges ahead.
Russian Bonds: Sifting Through Sectors5 mins read Blog | Apr 29, 2022 |
Russian bond market losses have cut deep. Still, certain sectors fared better than others. The question now is how trade policy and sanctions may be shifting, and whether there may be greater impact on sectors that have shown relative strength.
Russian Bonds: The 100-Year Storm?1 mins read Quick Take | Apr 7, 2022 |
The U.S. Treasury Dept. decided this week to effectively block payments to holders of two USD Russian sovereign bonds. These payments had been initiated by the Russian Ministry of Finance, but would have required the Russian government to access its reserves held at U.S. banks.
Threading the Needle Between Growth and InflationPodcast | Mar 24, 2022 |
How have the Fed and central banks around the world sought balance in the face of a myriad of challenges?
Bond-Index Replication While Navigating Volatility4 mins read Blog | Mar 23, 2022 |
Market volatility poses major challenges to investors trying to track bond indexes while also keeping transaction costs low. Can managers of funds tracking bond indexes balance transaction costs and tracking error?
Inflation is flying first class, will global growth find a ride?Podcast | Jan 13, 2022 |
As investors ponder the next move for economic growth, the effects of inflation and the Fed’s signaling they’re about to take away the punchbowl, we look at how different yield curves have shaped factor performance and the effects of various inflation/growth scenarios.
Climate Stress Tests: Imagine the UnimaginablePodcast | Aug 5, 2021 |
As regulations increase, along with a growing awareness of the impact of climate risks, we get real, with practical approaches for insurance companies and other institutional investors to evaluate the effects of climate change on portfolio management in a carbon-conscious world.
Everybody Was Da-ta MiningPodcast | Jul 22, 2021 |
Asset managers in the U.S. and Europe are clamoring for better data and standards to help meet rising demand for ESG strategies across asset classes. We dig deep into the results of a recent Index Industry Association (IIA) survey of 300 managers, with the IIA’s CEO, Rick Redding, Mark Purdy, managing director of Purdy & Associates and MSCI’s head of global solutions research, Raman Aylur Subramanian.
Why Is Climate-Transition Risk High in High Yield?6 mins read Blog | May 6, 2021 |
Investors increasingly focus on building greener portfolios. Some might expect bonds to be less exposed to climate-transition risk compared to equities, due to the seniority of bonds in the capital structure. But does that logic hold at the portfolio level?
Climate Transition and Bonds: Risk or Opportunity?5 mins read Blog | Feb 23, 2021 |
The transition to a low-carbon economy could significantly redirect the flow of investments toward greener companies and technologies that limit carbon emissions. We consider the potential risk — and opportunity — for bond investors.
Investor Reaction to US Elections and COVID-Vaccine Progress6 mins read Blog | Nov 18, 2020 |
To gauge investor expectations after Joe Biden was declared winner of the U.S. election and good news broke about COVID vaccines, we surveyed 151 U.S.-based financial advisers. We examine the advisers’ views on the next 12 months and markets’ reaction since Election Day.
Chinese Government Bonds: Higher Yield, Less Risk?6 mins read Blog | Nov 12, 2020 |
Global investors’ interest in Chinese government bonds has risen, as these bonds offer higher yields than developed-market sovereign debt. For investors thinking about adding Chinese bonds to their portfolios, what could be the impact on portfolio risk?
Will Interest Rates Surge? Evidence from Options Markets4 mins read Blog | Nov 3, 2020 |
With long-term interest rates near record lows, conventional wisdom suggests that they can only go up. But the interest-rate option markets seem to be telling a different story — that rate decreases are also a distinct possibility.
Hedging Inflation: A Scorecard5 mins read Blog | Aug 26, 2020 |
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.
Did Bonds Deliver? Leveraging Fixed Income During the COVID CrisisBlog | Jul 29, 2020 |
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.
Surging Corporate-Bond Supply: Reason to Worry?Blog | Jul 1, 2020 |
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.
US inflation: The market’s implied viewBlog | Apr 21, 2020 |
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.
Analyzing the Fed’s Unprecedented ActionsPodcast | Mar 30, 2020 |
Life in his hometown in Westchester County, NY moves at a slower pace these days, says Andy Sparks, MSCI’s head of portfolio management research. It’s caused him to recall simpler times from his childhood, even as he misses the controlled chaos of daily life before the COVID-19 pandemic. Andy explains that while no one knows exactly what comes next, market indicators suggest that the Fed’s actions could help meet their goal of an eventual rebound that is as “robust as possible.”
How could coronavirus impact credit markets?Blog | Mar 25, 2020 |
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?”
Something for nothing? Increasing bond duration may not increase portfolio riskBlog | Nov 20, 2019 |
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.
Home bias in fixed income: Has it helped or hurt?Blog | Jul 29, 2019 |
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.
Three scenarios for Fed rate cutsBlog | Jul 23, 2019 |
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?
A More politicized Fed? The Market YawnsBlog | Apr 16, 2019 |
Could the Federal Reserve Board (the Fed) become less independent, with political forces exerting more influence?
A New Day for Monetary Policy?Blog | Mar 22, 2019 |
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.
U.S. Real yields: Opportunities and Warning SignsBlog | Dec 12, 2018 |
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.
Remember, US inflation is a long and winding roadBlog | Sep 5, 2018 |
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.”
Bonds and Equities: Still Happy Together?Blog | Jun 25, 2018 |
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.
How easy is it to track a bond market index?Blog | Feb 15, 2018 |
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.
Are Corporate Bonds Vulnerable to ECB Tapering?Blog | Jun 7, 2017 |
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?
Navigating Central Bank Intervention in Corporate Bond MarketsResearch Report | May 2, 2017 |
Since the 2008 financial crisis, major central banks have purchased $9 trillion of bonds in efforts to reinvigorate the global economy. We focus on the impact of the ECB’s Corporate Sector Purchase Program. We find evidence that it has been a significant force in driving euro spreads tighter and stimulating corporate issuance. We examine the impact of the ECB program on a hypothetical credit value strategy investing in euro-denominated corporate debt. The analysis highlights how the portfolio...
Are convertible bonds more like equities?Blog | Mar 2, 2017 |
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?
Analyzing Credit Strategies from a Risk and Return PerspectiveBlog | May 3, 2016 |
Understanding the performance of credit portfolios is essential in explaining a strategy’s merits to clients and prospects.
Integrated Fixed-Income Risk and Performance AnalysisBlog | May 27, 2015 |
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.