Rising Greenbacks, Lower Treasury Yields and Emerging Markets

By James Dondero | November 18, 2014

• We believe that higher relative interest rates in the US will continue to attract investment flows. Hence, while the U.S. Dollar may be extended over the short term, a rising greenback will likely be with us for quite some time.

• Any short term weakness in the US Dollar could of course help crude oil stabilize. That being said, the decline in crude has been significant and lower prices at the pump will likely help consumer-related stocks going forward (including airlines and gadget-related technology stocks).

• We believe volatility in the treasury market could persist, potentially pressuring yields down another 20bp; however, we also believe that continued volatility in the rate markets will continue. During the trailing one-year, The Barclay’s Aggregate had five negative months versus the S&P 500 which had three negative months over the same period.

• Finally, we continue to see opportunity in select emerging markets such as India and China, where we believe significant government reform, and intervention, respectively, remain the most likely drivers going forward.

 

The views and opinions expressed are for informational purposes only and are subject to change at any time. This material is not a recommendation, offer or solicitation to buy or sell any securities or engage in any particular investment strategy and should not be considered specific legal, investment or tax advice. There is no guarantee that any of the forecasts will come to pass. Past performance is no guarantee of future results.

 

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