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Hong Xie

Senior Director, Global Research & Design, S&P Dow Jones Indices

Hong Xie is Senior Director, Global Research & Design at S&P Dow Jones Indices (S&P DJI). Hong is the lead investment strategist in fixed income, covering the research and design of strategy-based and thematic indices in fixed income, regularly publishing research papers in this field.
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Aug 18, 2020

The Flood of U.S. Treasury Issuance and Duration Supply Continues

In its Q3 2020 refunding statement1 released on Aug. 5, 2020, the U.S. Treasury announced its plan to increase auction sizes across all nominal coupon tenors over the August-October quarter, with larger increases in longer tenors (7-year, 10-year, 20-year and 30-year). To gauge the demand appetite for U.S. Treasuries, let’s review the size and composition…

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Jun 23, 2020

BBB Bond Downgrades Added USD 88 Billion to the High-Yield Bond Market YTD

In recent years, one noticeable development in the corporate bond market has been the rapid growth of the BBB bond market in terms of its absolute amount and relative share of investment-grade corporate bonds. We wrote a blog on this topic in May 2019 detailing the growth of the BBB bond market and its impact…

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Jun 3, 2020

Increased Supply of U.S. Treasuries and Interest Rate Risk

Since March 2020, the federal government has enacted four pieces of legislation to assist businesses and individuals weather the economic downtown triggered by the COVID-19 outbreak. According to the Congressional Budget Office (CBO), these four pandemic-related laws are projected to increase the federal deficit by USD 2.2 trillion in fiscal year 2020 and by USD…

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Apr 1, 2020

Delivering Low Volatility Exposure to High Yield Bonds

The last few weeks have been challenging for business the world over. People working from home and aggressive social distancing have led to business contraction and the expectation of rising default. On March 19, 2020, an S&P report expected that the U.S. trailing 12-month speculative-grade corporate default rate would rise to 10% within the next…

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Mar 23, 2020

U.S. Corporate Debt Market under Pressure

Since mid-February, the market has turned sharply down in response to the coronavirus pandemic. The S&P 500® has fallen about 32% from its peak this year. Equity volatility shot up, as VIX® went from historical lows to the 70-80 range, which was last seen in November 2008. The 10-year U.S. Treasury Bond yield reached 0.32%…

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Sep 13, 2019

The Outperformance of the S&P U.S. High Yield Low Volatility Corporate Bond Index since Q4 2018

The S&P U.S. High Yield Low Volatility Corporate Bond Index[1] is designed as a low volatility strategy in the high yield bond universe. The index aims to deliver higher risk-adjusted returns than the underlying broad-based benchmark through mitigating uncompensated credit risk. The back-tested index performance demonstrated the efficacy of the low volatility strategy, with reduced…

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Aug 7, 2019

Defensiveness of the Credit Strength Strategy in U.S. Corporate Bonds

Our fundamental credit strength strategy uses credit ratios to screen out issuers with risky credit profiles and construct corporate bond portfolios with strong credit quality (for a detailed methodology, please see our previous blog). Our research shows that a credit strength strategy can potentially reduce return volatility and improve drawdowns. Our goal in this blog…

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Jul 10, 2019

Using Credit Ratios to Build Defensive Corporate Bond Portfolios

For corporate bond managers, credit analysis is a key step in the investment process, one that lays the foundation for their credit outlook and investment strategies. Credit analysis assesses bond issuers’ creditworthiness and evaluates their ability to make timely interest and principal payments. Credit analysis is critical in helping bond managers assess the state of…

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May 29, 2019

Risk-Reward Analysis of Selecting Active Managers

Although there seems to be more research on economic forecast and market analysis than manager selection, selecting investment managers is just as challenging as direct investing and requires considerable experience and expertise. In this blog, we investigate the return distribution of fixed income and equity funds to highlight the challenge of successfully selecting outperforming active…

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May 1, 2019

Increasing Share of BBB-Rated Bonds and Changing Credit Fundamentals in the Investment-Grade Corporate Bond Market

Since the 2008/2009 financial crisis, BBB-rated bonds have seen significant growth in the U.S. Today, they constitute more than half of the U.S. investment-grade bond market. The increasing share of BBB-rated bonds has dragged the S&P U.S. Investment Grade Corporate Bond Index average credit rating lower, and is accompanied with higher leverage of BBB-rated bond…

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