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Weekly Market Summary

Apr 15 to Apr 19, 2024

View Current Performance

Extra Credit*

  • March Consumer Price Index (CPI) inflation surprised to the upside, indicating that the “bump” in inflation in January and February extended to March. Overall, the report showed a 0.38% month-over-month increase in headline CPI, along with a 0.36% month-over-month (3.80% year-over-year) rise in core CPI. The March prints are little changed from the prior month. With the release likely eroding the FOMC’s confidence that inflation is moving sustainably toward 2%, many investors are likely readjusting their own dot plots for interest rates. It should not surprise anyone that the market is now likely not pricing in that the FOMC will be comfortable initiating every-other-meeting cuts to begin in June. Instead, some expect only one 25 basis point cut this year, in September. This is premised upon a slowing in core personal consumption expenditures (PCE) inflation to 0.20% month-over-month by June.
  • The European Central Bank (ECB) stayed on course to begin easing in June as it assessed that its projections from March, which see inflation returning to target in a timely manner, have been broadly confirmed. The ECB also changed its guidance, no longer stating that rates need to be "maintained for a sufficiently long duration" but instead saying that if the updated assessment of the three criteria in its reaction function — the inflation outlook, underlying inflation, and transmission — "were to further increase [the Governing Council's] confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction." Strongly hinting at a cut at the next meeting, President Lagarde repeated that "we will know a lot more in June."
  • The Japan government and the Bank of Japan (BoJ) appear increasingly vigilant of the current Japanese yen (JPY) depreciation. In a recent interview, Governor Ueda said the BoJ “would respond with monetary policy if the exchange rate trend had an impact on wages and prices that could not be overlooked” and that “if we ended large-scale easing because the certainty of achieving the price stability target reached 75%, then we would move interest rates if this rose to 80 or 85%,” suggesting monetary policy could be revised further depending on oil and JPY impacts on inflation. According to an article released the same day by Bloomberg, Prime Minister Kishida remarked that the government would “take appropriate action without ruling out any options” in response to excessive exchange rate moves, adding that he expects the BoJ to “maintain close contact with the government and to manage policy flexibly in response to economic developments.”
  • The recent pickup in the price of Brent oil from the $80-$85/bbl range to around $90/bbl is generally unhelpful for largely oil-importing Emerging Asia, but there may be little reason to sound the alarms just yet. Higher oil prices are generally negative for economic activity in the emerging market (EM) region, but estimates suggest a $10/bbl increase in Brent only reduces gross domestic product (GDP) growth by a relatively modest 0.1-0.2 percentage points for most of Emerging Asia. The exception is Malaysia, which – as the only net-oil and gas exporter among the major Emerging Asian economies – stands out as a beneficiary of higher oil prices in the region. Indonesia occupies a more ambiguous position because the country is a net importer of oil and gas but a large exporter of other commodities – higher oil prices on their own would thus be negative for its economy, but if the increase occurs as part of a broader rise in commodity prices (especially for palm oil and coal), the overall impact could be positive. Likewise, the growth impact on Singapore – with its significant industrial involvement in marine and offshore engineering – could be more mixed for economic impact.
  • Bank-loan and high-yield bond default rates, excluding distressedexchanges, finished March at 1.86% and 1.67%, respectively, up from 1.77% and1.66% in February. The 25-year historical default rate for loans and high-yieldbonds is 3.00% and 3.40%, respectively.

A bbl is one barrel of oil.

Sources: Bloomberg and JP Morgan as of 4/15/24.

Yield as of:
Apr 19, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year
Option Adjusted Spread as of:
Apr 19, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
323 bps
483 bps
86 bps
Prior Week
310 bps
480 bps
84 bps
Start of the Year
323 bps
501 bps
93 bps
Prices as of:
Apr 19, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year

*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.

Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.

Investors should consider a fund’s investment goal, risks, charges, and expenses carefully before investing. The prospectus and/or the applicable summary prospectus contain this and other information about the Fund and are available from AristotleFunds.com. The prospectus and/or summary prospectus should be read carefully before investing.

Investing involves risk. Principal loss is possible.

Foreside Financial Services, LLC, distributor.

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