March snapshot

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April 9, 2021

BNY Mellon is committed to delivering cost-effective, quality solutions to help investors achieve their financial goals. Whether you’re new to investing or you’re a seasoned investor, exchange-traded funds (ETFs) can be a simple, cost-effective approach for broad market participation. Here we consider some of the major trends making headlines today.

1SPGlobal: US Equity Market Attributes March 2021. April 2, 2021. 2CNBC: 10-year Treasury yield pulls back after hitting 14-month high in morning trade. March 30, 2021. 3GEIA monthly market roundup: April 2021. 4GEIA monthly market roundup: April 2021. 5GEIA monthly market roundup: April 2021. 6Reuters: Japan’s factory output activity picks up in March on growing output orders – flash PMI. March 23, 2021. 7GEIA monthly market roundup. April 2021. 8GEIA monthly market roundup. April 2021. 9GEIA monthly market roundup: April 2021. 10Reuters: Russian inflation accelerates to 5.8% y/y/ in March, highest since late 2016. April 6, 2021. 11GEIA monthly market roundup: April 2021. 12Bloomberg: UK services activity accelerates as upbeat mood spurs hiring. April 7, 2021. 13GEIA monthly market roundup: April 2021. 14GEIA monthly market roundup: April 2021. 15GEIA monthly market roundup: April 2021. 16World Bank: Commodities Price Data: April 2, 2021.

Past performance is no guarantee of future results.

Market Makers

“The US 10-yr Treasury yield has surged nearly 80 bps from the beginning of the year as investors rotate into sectors that benefit from a rebounding economy and a steeper yield curve. The risk to yields is higher over the next 6-12 months. ”

The Global Investment and Economics Analysis team at BNY Mellon Investment Management

Going for Growth

“Consumer confidence is improving as portions of the economy continue to reopen and the US achieves a vaccination rate of 36%17 of its population.”

The Global Investment and Economics Analysis team at BNY Mellon Investment Management

Inflation Intelligence

“While our ‘most likely’ scenario is one where policy rates remain at their effective lower bound until the end of 2022, our probability-weighted expectation is for policy rates to increase to around 1% by end 2022, driven by inflation increasing more than expected.”

The Global Investment and Economics Analysis team at BNY Mellon Investment Management

Currencies and Commodities

“Options markets are signaling a more favorable balance of risk for the dollar going forward, with risk reversals (a measure of skewness in expectations derived from option prices) becoming less negative and reaching or increasing above longer-term average levels. ”

The Global Investment and Economics Analysis team at BNY Mellon Investment Management

DEFINITIONS

10-Year US Treasuries: Average yield of a range of Treasury securities all adjusted to the equivalent of a ten-year maturity.
Core Inflation: The change in the costs of goods and services but does not include those from the food and energy sectors.
US Crude: Generic West Texas Intermediate crude oil spot price.
S&P 500: A stock market index that measures stock performance of 500 large companies listed on the stock exchanges in the United States.
Manufacturing PMI: An economic indicator derived from monthly surveys of private sector companies. A level above 50 indicates expansion compared to the prior month and below 50 contraction.
Spot prices: The current price in the marketplace at which a given asset can be bought or sold in the marketplace.
MSCI ACWI: The MSCI All-Country World is an index that tracks the performance of both Developed and Emerging Market equities.
Consumer Price Index (CPI): Index measures changes in the price level of market basket of consumer goods and services purchased by households.
USD: The US Majors Dollar Index tracks the performance of the USD versus a basket of foreign currencies including the euro, Japanese yen, Pound sterling, Canadian dollar, Swedish krona, and Swiss Franc.
Caixin Services PMI: Based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private sector companies in China. A reading above 50 indicates the services sector is expanding while a reading below indicates it is contracting.
Input Price Inflation: Increase in prices of inputs like labor, raw materials etc.
FX: Refers to the global electronic marketplace for trading international currencies and currency derivatives.
Risk reversal: A hedging strategy that protects a long or short position by using put and call options. It is intended to protect against unfavorable price movements in the underlying position but limits profits that can be made on that position.

ETFs trade like stocks, are subject to investment risk, including possible loss of principal. The risks of investing in the ETF typically reflect the risks associated with the types of instruments in which the ETF invests. Diversification cannot assure a profit or protect against loss.

ETF shares are listed on an exchange, and shares are generally purchased and sold in the secondary market at market price. At times, the market price may be at a premium or discount to the ETF’s per share NAV. In addition, ETFs are subject to the risk that an active trading market for an ETF’s shares may not develop or be maintained. Buying or selling ETF shares on an exchange may require the payment of brokerage commissions.

Bonds are subject to interest rate, credit, liquidity, call and market risks, to varying degrees. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes and rate increases can cause price declines. High yield bonds involve increased credit and liquidity risk than higher rated bonds and are considered speculative in terms of the issuer’s ability to pay interest and repay principal on a timely basis. Equities are subject to market, market sector, market liquidity, issuer, and investment style risks to varying degrees. Small and midsized company stocks tend to be more volatile and less liquid than larger company stocks as these companies are less established and have more volatile earnings histories. Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries.

Currencies can decline in value relative to a local currency, or, in the case of hedged positions, the local currency will decline relative to the currency being hedged. These risks may increase fund volatility. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be appropriate for all investors.

Past performance is no guarantee of future results.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular investment, strategy, investment manager or account arrangement and should not serve as a primary basis for investment decisions. Please consult a legal, tax or financial professional in order to determine whether an investment product or service is appropriate for a particular situation.

Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. The information in this presentation is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed to be reliable but not guaranteed as to its accuracy.

BNY Mellon Investment Management is one of the world’s leading investment management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally. BNY Mellon ETF Investment Adviser, LLC is the investment adviser and BNY Mellon Securities Corporation is the distributor of the BNY Mellon ETF funds, both are subsidiaries of BNY Mellon.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

MARK-181917-2021-04-09