What You Need to Know

What a difference a quarter can make.
The S&P 500 and US high-yield debt kickstarted 2019 by generating their best quarterly returns since 2009, while government bonds also posted attractive returns. It was a refreshing change from the poor performance across asset classes at the end of 2018.

Improvement in S&P 500 performance

from 4Q:2018 to 1Q:2019

Fed Rate Hikes

Expected in 2019

Yield-to-Worst on Global High-Yield Bonds,

a Good Predictor of Five-Year Forward Annualized Return?

While few would debate that we’re “Later in the Cycle,” opinions about what will happen over the next 12 to 18 months vary quite a bit–especially when it comes to central bank action. We think the Fed wants to see higher inflation and that US interest rates will remain on hold until the end of 2020 as a result. The market disagrees, however, and is starting to price in rate cuts. We think that’s too big a shift in perspective for the central bank, and we expect yields to rise modestly over the coming year as reality sinks in. Whose side are you on?

We believe investors should focus on high-quality stocks, ensure that portfolios have adequate downside protection and prepare for interest rate volatility, without shying away from duration.

Past performance, historical and current analyses, and expectations do not guarantee future results. There can be no assurance that any investment objectives will be achieved. The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AB or its affiliates.

The views expressed herein do not constitute research, investment advice, or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

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