S&P 500 vs. High-Grade U.S. Bonds vs. Junk U.S. Bonds While U.S. stocks generally have higher long-term returns, the current economic climate may favor junk U.S. bonds as a more stable investment option amidst fears of an equity downturn. Image: Bloomberg
U.S. Investement Grade Corporate Bond Spreads Will U.S. Investment Grade corporate bond spreads remain unchanged for an extended period? Image: BofA Global Investment Strategy
Equities – MSCI ACWI Total Return vs. U.S. High Yield/High Grade Total Return Relative Is credit a bearish sign for global equities? Image: BofA Global Investment Strategy
S&P 500 vs. U.S. High Yield/High Grade and Large Cap Growth to Small Cap Value Charts suggesting that new highs in stocks need high yield outperformance and sustained rotation from large cap growth to small cap value. Image: BofA Global Investment Strategy
Quarterly Dollar Notional Amounts of Bonds Downgraded from IG to HY The pace of rating downgrades has accelerated markedly in recent months. Image: Goldman Sachs Global Investment Research
S&P 500 Total Return Index and U.S. High Yield/High Grade Chart suggesting a bullish market that is getting stretched and vulnerable. Image: BofA Global Investment Strategy
Total Return – U.S. Equities vs. U.S. Corporate Bonds Should investors favor investment grade corporate bonds over U.S. stocks? Image: BofA Global Investment Strategy
Deflation Assets vs. Inflation Assets Is the 40-year bull market in bonds over? Deflation Assets: government bonds, U.S. investment grade, S&P 500, U.S. consumer discretionary, growth and US high yield.Inflation Assets: TIPS, EAFE, U.S. banks, value and cash. Image: BofA Global Investment Strategy
Inflation Assets vs. Deflation Assets The leadership remains deflationary, and the laggards remain inflationary. Deflation assets: government bonds, U.S. investment grade, S&P 500, U.S. consumer discretionary, growth and US high yield. Inflation assets: TIPS, EAFE, U.S. banks, value and cash. Image: BofA Global Investment Strategy
U.S. Corporate Bond Ownership More than 25% of U.S. corporate bonds are held by insurance companies. Many investment grade investors are not allowed to hold junk-rated bonds. Any drop in the credit ratings could amplify the next recession. Image: NBF Economics and Strategy
The Performance of “Deflation Assets” vs. “Inflation Assets” Interesting chart showing the performance of “Deflation Asset” vs. “Inflation Assets” since 1960. “Deflation Assets”: Government Bonds, US Investment Grade, S&P 500, US Consumer Discretionary, Growth and US High Yield “Inflation Assets”: TIPS, EAFE, US Banks, Value and Cash Image: BofA Merrill Lynch