Investor Account Access
Investor access to Shareowner accounts and Closed End Funds accounts.
Thursday 07 November 2024
Investment Talks
November 2024 | Former President Donald Trump will return to the US White House for the next four years and, with the Republican party also taking the Senate and possibly the House, a “red sweep” is the most likely outcome. Financial markets reacted by extending popular “Trump trades” – pushing up bond yields, the US dollar and equity futures – as investors assign higher odds of Trump turning policy proposals into reality. The inflation impact of Trump’s policies will pose risks to fixed income investments, and these could be amplified by concerns about US fiscal sustainability.
01 | We think the new president may prioritize tariff and immigration policies over tax cuts, as these can be implemented through executive orders without congressional approval.
02 | Full implementation of Trump’s far-reaching tariff proposal will likely leave no winners in a world of heightened trade uncertainty and protectionism.
03 | We believe higher inflation and a more hawkish Fed will pose risks to fixed income investments, while supporting the dollar in the short term. Tighter financial conditions may be transmitted across the globe, with Asian markets particularly vulnerable given the added shock from higher tariffs.
Important Information
Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of November 6, 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the authors and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.
RO ID# 4011066
©2024 Amundi Asset Management
Although full year 2024 returns for High Yield were strong and spreads tightened during the fourth quarter, fourth quarter returns were weak with losses in both October and December due to yield curve headwinds. While defaults have moderated over the last few months, Moody’s recently increased its year-end global speculative grade default by issuer forecast to 4.6% on weaker US employment. Moody’s also projects the global default rate by issuer count to decline steadily across 2025, reaching 2.7% by next November.
To date, the US tech winners have been those companies that are engaging in substantial AI investments. The question is how and/or when will these be monetized. In the US, we expect a reset of the tech sector valuation levels, and we prefer to diversify risk away from monothematic AI plays. Specifically, leading memory players are building up capacity in high-bandwidth memory, which supports the training of AI models, and there could be a risk of over-capacity. There is also a greater focus on geopolitics among investors, and share price volatility could increase in 2025 as Trump's government is inaugurated. The primary issues are tariffs, revisions to the US Chip Act and a fall in China-US relations, all factors that could hurt the semiconductor supply chain globally.
Corporate debt spreads have tightened to near-record levels as the US economy has continued to expand and the Fed has begun to decrease its short-term interest rate target. We believe the improving credit health of the loan universe, the fact that loan coupons are priced off the front end of the still-inverted curve, and the strong possibility that the Fed will be unable to cut rates quickly due to sticky inflation, support the inclusion of loans in income-oriented portfolios. Additionally, considering the likely continuing stickiness of core services inflation, we believe floating rate assets such as loans are currently an attractive option to add diversification to investors’ fixed income portfolios, which are generally weighted in favor of fixed-rate instruments. In effect, we consider loan allocations to represent hedges against continuing high inflation.
Before investing, consider the product's investment objectives, risks, charges and expenses. Contact your financial professional or Amundi US for a prospectus or summary prospectus containing this information. Read it carefully. To obtain a free prospectus or summary prospectus and for information on any Pioneer fund, please download it from our literature section.
Securities offered through Amundi Distributor US, Inc.
60 State Street, Boston, MA 02109
Underwriter of Pioneer mutual funds, Member
SIPC.
Not FDIC insured | May lose value | No bank guarantee Amundi Asset Management US, Inc. Form CRS Amundi Distributor US, Inc. Form CRS