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Global Fixed Income Bulletin
enero 15, 2022

Déjà vu? No, 2022 Will Not Look Like 2021

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enero 15, 2022

Déjà vu? No, 2022 Will Not Look Like 2021

Global Fixed Income Bulletin

Déjà vu? No, 2022 Will Not Look Like 2021

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enero 15, 2022


Financial markets had a good December despite Covid infections rising rapidly at the end of the month as the more contagious Omicron variant took over. Equities rallied, credit spreads tightened and even emerging markets had a good month, reversing much, if not all, of the sell offs in equities and credit in the second half of November. Government bond yields did rise, and have continued to rise further in January, in some countries substantially, but the increases in Europe and the U.S. did not dent the overall bullish economic outlook and merely returned yields to the ranges prevailing for most of the second half of 2021. The economic outlook brightened meaningfully in the fourth quarter as manufacturing output improved significantly as supply constraints began to ease and inventories are being restocked.


However, the end of 2021 looks very different from how it began. The year began positively: vaccines and massive fiscal stimulus were coming and, importantly, inflation was well contained, with the market and U.S Federal Reserve (Fed) projecting no changes in monetary policy until at least mid-2023. Currently the world faces a highly contagious variant, a very hawkish Fed with multiple 2022 rate hikes priced in, U.S fiscal policy in limbo and surging inflation. So, while on the surface things in early 2022 look like early 2021, it is not déjà vu by any stretch of the imagination.

Three questions need to be answered.  First, how impactful, economically speaking, will Omicron be? Second, how much should markets fear the Fed?  Third, will inflation slow?

The Omicron wave has pushed global infections to record highs before it has even hit Asia. This is likely to negatively impact growth.  Our working assumption is that the Omicron wave will burn itself out relatively quickly due to its greater contagiousness, reduced virulence and high levels of vaccinations so that economic activity will take a hit in the first quarter, but it should not be too large.  It should also impact services (increased cautiousness, reduced mobility) more than goods.  Its impact on inflation is somewhat ambiguous as it will hit services supply (reduced) and demand (reduced) with goods output relatively unaffected.

Fed behavior in 2022 is likely to have a more long-lasting impact than Omicron (we truly hope!).  The Fed has turned decisively hawkish.  There appears to be minimal to no dissent to raising rates multiple (two to four) times in 2022, starting as soon as May, accelerating tapering, ending quantitative easing (QE) in March/April, and beginning quantitative tightening (a.k.a. shrinking the balance sheet), potentially also by mid-year. Crucially, what the Fed has not done, at least not yet, nor the market, is raise the expected terminal Fed funds rate.  The market thinks it is in the 1.75% - 2.00% range and the Fed is at 2.25% - 2.50%. Two possibly non-mutually exclusive bearish things can happen: the market increases its pricing to be in line with the Fed’s forecast, which would push longer maturity yields higher, and the Fed could find itself fighting a stubborn inflation wave whereby it might increase its terminal rate forecast higher yet.  This reduction in liquidity in 2022 and higher rates (market has already priced in 3+ hikes this year) will support higher bond yields.  Quantitative tightening (QT) may be the trigger for a steeper yield curve in 2022.  However, the biggest risk to financial markets is how the Fed manages its balance sheet.  The market knows how to price rate hikes; it is much more uncertain as to what to do with potentially rapid balance sheet shrinkage.

Lastly, the inflation outlook is of paramount importance as the unexpectedly large global inflation shock is what is driving tighter monetary policy in so many countries, not just in the U.S but also many emerging markets, Canada, UK, Australia, Norway and New Zealand. The good news, we believe, is that inflation will come off the boil in the first quarter as energy inflation subsides.  This will be the first drop in this expansion.  Unfortunately, this drop in headline inflation does not mean that core inflation will drop.  The trajectory of core inflation has been buffeted by both supply and demand shocks.  Core inflation should stabilize at a minimum and hopefully fall, if only marginally.  But the good news is that for the first time in over a year the markets will likely see inflation fall.  The question is, will it fall enough to prevent central banks from tightening more than expected?

In terms of market views, we have generally been reducing portfolio risk into year-end given the uncertain outlook. We remain long risky assets (corporate credit, securitized credit, emerging markets) because of the positive economic outlook (slower but still strong growth/lower inflation) and expectations that Omicron will leave economies relatively unscathed. We expect developed economy government bond yields to continue to move higher but, as we have seen multiple times in the past, they remain at the mercy of risky asset performance, shifting/unstable risk preferences, and Covid.  

Display 1: Asset Performance Year-to-Date

Note: USD-based performance. Source: Bloomberg. Data as of December 31, 2021. The indexes are provided for illustrative purposes only and are not meant to depict the performance of a specific investment. Past performance is no guarantee of future results. See below for index definitions.

Display 2: Currency Monthly Changes Versus U.S. Dollar

Note: Positive change means appreciation of the currency against the USD. Source: Bloomberg. Data as of December 31, 2021.

Display 3: Major Monthly Changes in 10-Year Yields and Spreads

Source: Bloomberg, JPMorgan. Data as of December 31, 2021.


Fixed Income Outlook

December turned out very well for most asset markets, both in absolute terms and relative to what happened in November, when markets performed poorly. The flattening of yield curves slowed a bit but still flattened.  Government bond yields generally rose, giving back much of the November rally.  Interestingly, the English-speaking country bond markets outperformed even though their respective central banks are the most hawkish.1  Impressively, high yield bonds recouped all they lost in November with investment grade not far behind, not completely recovering all that was lost in the second half of November.2 The downside to this December rally in credit markets is it reduces 2022 expected returns, especially given the Fed’s decisive turn to hawkishness.

How the Omicron infection wave plays out will have a significant impact on economies and markets.  Given its behavior to date, our assumption is that it will not disrupt underlying economic trends or policy reactions significantly.  For sure, certain sectors of the economy will be impacted in the short run, but it is expected to be short-lived, and we can expect underlying trends to remain robust.  Those trends look supportive for growth and corporate cash flow and, unfortunately, above target inflation. 2022, like 2021, should be another year of above trend growth with the U.S achieving full employment (however defined) and most other countries recouping or surpassing previous levels of output and employment. Unfortunately, high and persistent levels of inflation have also triggered changes in monetary policy expectations. The trend of central banks globally reducing accommodation is intensifying relative to what was expected just a month ago.  How this is executed will be a defining event in 2022.

One of the biggest surprises in 2021 was the decline in real yields. Developed economies boomed, unemployment rates fell significantly, wages rose more than expected and inflation roared back. Indeed, 2021 was a year of large upside surprises in inflation, the first in over 20 years of undershooting expectations and forecasts.  Despite this very strong macroeconomic backdrop, nominal yields surprisingly fell over the last three quarters of the year and pushed real yields deep into negative territory. Current market pricing is for real yields across the yield curve to stay negative far into the future. This is a very pessimistic forecast and one unlikely to be true if secular stagnation does not return (although we cannot completely dismiss the possibility).  The depressed state of real yields is a function of a variety of factors that should dissipate in importance, like all-time easy monetary policy.  The Fed needs real yields to rise to slow inflation.  How high they need to go will depend on the financial market’s reaction. The more long-term yields rise, the less tightening required.  The expected move to begin QT adds an element of uncertainty as markets do not have much experience in handicapping a higher rates/QT combo (nor does the Fed).  Real yields led by the U.S. are already moving higher in anticipation of these events.  Therefore, nominal and real yields should move higher in 2022 as liquidity is withdrawn and inflation falls.

One important factor keeping longer maturity yields low (outside of massive global liquidity) is, in our view, expectations that terminal rates, i.e., the peak in policy rates, will not reach new highs.  Indeed, current market expectations are that peak rates this cycle will be meaningfully lower than last cycle (2015-2018).  The risk to bond valuations comes more from the length of the hiking cycle and the eventual terminal policy rate rather than the pace or start date (although they matter for the shape of the yield curve).  With inflation proving to be stubborn, there is a danger expected terminal rates will be moved higher by both the market and Fed. That said, we believe inflation will fall in 2022, growth in output and employment will slow, and the Fed will calibrate its tightening cycle as more information arrives.  It may be true that this is just an inflation scare.  By mid-year, when we know more about how fast inflation is falling, the Fed will be able to slow down its tightening.  Of course, the opposite is true as well!

Other central banks will be reinforcing the Fed’s message with the Bank of Canada (BoC) primed to raise rates soon (beating the Fed to the starting line), while the Bank of England (BoE), Reserve Bank of New Zealand (RBNZ) and Norges Bank have already started hiking. Most emerging market (EM) central banks have been raising rates, aggressively in many cases, for most of the last 12 months.  While we can expect more hikes if inflation keeps rising, given their head start, it is likely that they will be able to stop hiking rates even with the Fed in rate hiking mode if their economies should weaken and inflation rates fall. The European Central Bank (ECB) is going at a slower pace, given it is not yet convinced inflation will not fall below its target level again after the inflation shock is over, but it will significantly reduce, and possibly end, QE this year, which should prevent yields from falling.  Even in Japan, inflation is turning out higher than expected and with no changes in Bank of Japan (BoJ) policy priced in, this could be a source of policy surprise in 2022.  Only in China is monetary policy diverging from the Fed.  Their zero Covid strategy and attempts to balance growth objectives with deleveraging is going to keep the Chinese central bank in accommodative mode in 2022.

Credit investors have also become more nervous recently, causing credit spreads to widen; we think this is mainly reflective of how tight spreads became, rather than any meaningful increase in default risk or deteriorating fundamentals. Further widening could be a buying opportunity.  EM risk remains predominantly on the local side.  Very hawkish central banks, with inflation pressures still evident, make it premature, despite significant rate hikes in recent months, to get bullish.  The Fed moving to a less accommodative posture in the months ahead is also likely to be a challenge.  Politics in several countries is taking its toll.

Where does this leave our views on markets? In general, we remain overweight the riskier, cyclical sectors but less so than several months ago.  We think high yield, securitized credit and floating-rate loans will outperform government bonds, agency mortgage-backed securities (MBS) and investment grade credit, but by less than in 2021. We think low expected terminal rates and highly negative real yields make longer-maturity bonds relatively unappealing.  However, this outcome is contingent on the Fed not overdoing it, either on purpose or by accident.  If markets sense recession risks rising, performance rankings will flip with investment grade and government bonds expected to outperform.  Local EM looks interesting given how much central banks raised rates.  Examples include Mexico, Brazil, South Africa, and Russian local bonds.  On the external side, we are more selective, but do expect high yielding sovereign bonds to reverse their 2021 underperformance.  Once inflation peaks, substantial risk premiums should fall.  Shorter maturity bonds are more interesting due to much higher risk premiums now priced in. How China manages their zero-Covid strategy will also be impactful both on the demand and supply sides.  And, of course, Omicron remains a risk as does the risk of another unknown variant showing up.

Developed Market Rate/Foreign Currency

Monthly Review

Two key storylines drove rates in developed markets in December: the Omicron variant and central bank policy meetings.  Overall, although the month began with rates briefly falling following a flight-to-safety given Omicron fears, developed market rates for the most part ended the month higher.  The U.S. dollar did not move significantly in December, while emerging market currencies were mixed.


Monetary policy and Covid circumstances will continue to drive DM rate movements.  We see the risks skewed towards higher inflation, leading to a hawkish central bank bias and higher rates as well as steeper yield curves.  Overall, we see value in many EM currencies versus G10.

Emerging Market Rate/Foreign Currency                          

Monthly Review

EM debt returns were positive in December.  Hard currency sovereigns performed well driven by tighter spreads, although partially offset by higher U.S Treasury yields.3 EM corporate returns were positive for the month, with high yield outperforming investment grade corporates.4 Local currency bonds posted positive returns, primarily due to stronger EM currencies against the U.S. dollar.5


We moved from a cautious to an opportunistic outlook for EM debt. Though tighter global monetary policy, elevated inflation, and uncertainty over the Omicron variant may limit scope for a sizable rally in risky assets, global growth remains solid and commodity prices recovered during the month. In such a backdrop, there is room for high yield EM credit to outperform investment grade. On the local side, some currencies look substantially cheap and could outperform in a scenario where uncertainty subsides. In local rates, we prefer yield curves that are already pricing in aggressive monetary policy tightening.

Corporate Credit

Monthly Review

Corporate credit spreads tightened meaningfully in December as risky assets in general rallied. Corporate news in the month was limited due to the holidays, but M&A remained a constant theme with the cheap debt and expected economic rebound in 2022 driving deals.

The high yield market recorded a strong return in December, despite volatility remaining sharply elevated, led by lower credit quality.

Global convertibles underperformed both equity and credit for the second consecutive month in December, led largely by asset class underweights to the best-performing equity sectors: Energy, Financials, Real Estate and Materials.


We see little change in the base case credit outlook with valuations looking full but fundamentals well supported. We expect some volatility in early 2022 given the current uncertainty and lack of appetite for risk positioning.

Floating-Rate Loans

Monthly Review

Robust investor demand for floating-rate assets fuelled the senior loan market’s rebound in December.  Fundamentals continued to showcase healthy credit conditions and quality-level themes followed the familiar Covid-era risk-on form: lower-rated loans outperformed.


We expect continued strong technicals and fundamentals.  The healthy credit picture and investors’ ongoing search for yield will drive continued flows to the sector.  Additionally, above trend economic growth, strong credit metrics and low default rates will create a strong fundamental environment.

Securitized Products

Monthly Review

Mortgage and securitized markets were generally quiet in December, both in terms of trading activity and pricing volatility.  Securitized new issuance volumes set post-financial crisis records for 2021, despite a slower December.  Spreads were slightly tighter in agency MBS.6 Agency MBS demand remains robust as the Fed is still net buying MBS and reinvesting prepayments (despite reducing the size of net buying) and U.S banks continue to increase their holdings. Non-agency RMBS, CMBS and ABS spreads were generally wider during the month, however performance varied significantly by sub-sector.7


Overall, we believe the securitized market offers an attractive combination of low duration and attractive yields with solid credit fundamentals. We remain constructive on securitized credit and are modestly overweight. We remain cautious on agency MBS and interest rate risk, and we continue to manage portfolios with relatively short durations. 


1 Source: Bloomberg Global Treasury indices. Data as of December 31, 2021.

2 Source: Bloomberg Global Corporate index, Bloomberg  

3 Source: JPM EMBI Global Diversified Index.  Data as of December 31, 2021.

4 Source: J.P. Morgan CEMBI Broad Diversified Index.  Data as of December 31, 2021.

5 Source: J.P. Morgan GBI-EM Global Diversified Index.  Data as of December 31, 2021.

6 Source: Bloomberg.  Data as of December 31, 2021.

7 Source: Bloomberg, as of December 30, 2021.



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There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and that the value of portfolio shares may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in a portfolio. Fixed-income securities are subject to the ability of an issuer to make timely principal and interest payments (credit risk), changes in interest rates (interest rate risk), the creditworthiness of the issuer and general market liquidity (market risk). In a rising interest-rate environment, bond prices may fall and may result in periods of volatility and increased portfolio redemptions. In a declining interest-rate environment, the portfolio may generate less income. Longer-term securities may be more sensitive to interest rate changes. Certain U.S. government securities purchased by the strategy, such as those issued by Fannie Mae and Freddie Mac, are not backed by the full faith and credit of the U.S. It is possible that these issuers will not have the funds to meet their payment obligations in the future. Public bank loans are subject to liquidity risk and the credit risks of lower-rated securities. High-yield securities (junk bonds) are lower-rated securities that may have a higher degree of credit and liquidity risk. Sovereign debt securities are subject to default risk. Mortgage- and asset-backed securities are sensitive to early prepayment risk and a higher risk of default, and may be hard to value and difficult to sell (liquidity risk). They are also subject to credit, market and interest rate risks. The currency market is highly volatile. Prices in these markets are influenced by, among other things, changing supply and demand for a particular currency; trade; fiscal, money and domestic or foreign exchange control programs and policies; and changes in domestic and foreign interest rates. Investments in foreign markets entail special risks such as currency, political, economic and market risks. The risks of investing in emerging market countries are greater than the risks generally associated with foreign investments. Derivative instruments may disproportionately increase losses and have a significant impact on performance. They also may be subject to counterparty, liquidity, valuation, and correlation and market risks. Restricted and illiquid securities may be more difficult to sell and value than publicly traded securities (liquidity risk). Due to the possibility that prepayments will alter the cash flows on collateralized mortgage obligations (CMOs), it is not possible to determine in advance their final maturity date or average life. In addition, if the collateral securing the CMOs or any third-party guarantees are insufficient to make payments, the portfolio could sustain a loss.

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The indexes shown in this report are not meant to depict the performance of any specific investment, and the indexes shown do not include any expenses, fees or sales charges, which would lower performance. The indexes shown are unmanaged and should not be considered an investment. It is not possible to invest directly in an index.

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The Bloomberg Euro Aggregate Corporate Index (Bloomberg Euro IG Corporate) is an index designed to reflect the performance of the euro-denominated investment-grade corporate bond market.

The Bloomberg Global Aggregate Corporate Index is the corporate component of the Bloomberg Global Aggregate index, which provides a broad-based measure of the global investment-grade fixed income markets.

The Bloomberg U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt.

The Bloomberg U.S. Corporate Index is a broad-based benchmark that measures the investment grade, fixed-rate, taxable, corporate bond market.

The Bloomberg U.S. Mortgage Backed Securities (MBS) Index tracks agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC). The index is constructed by grouping individual TBA-deliverable MBS pools into aggregates or generics based on program, coupon and vintage. Introduced in 1985, the GNMA, FHLMC and FNMA fixed-rate indexes for 30- and 15-year securities were backdated to January 1976, May 1977 and November 1982, respectively. In April 2007, agency hybrid adjustable-rate mortgage (ARM) pass-through securities were added to the index.

Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.

Euro vs. USD—Euro total return versus U.S. dollar.

German 10YR bonds—Germany Benchmark 10-Year Datastream Government Index; Japan 10YR government bonds —Japan Benchmark 10-Year Datastream Government Index; and 10YR U.S. Treasury—U.S. Benchmark 10-Year Datastream Government Index.

The ICE BofAML European Currency High-Yield Constrained Index (ICE BofAML Euro HY constrained) is designed to track the performance of euro- and British pound sterling-denominated below investment-grade corporate debt publicly issued in the eurobond, sterling

The ICE BofAML U.S. Mortgage-Backed Securities (ICE BofAML U.S. Mortgage Master) Index tracks the performance of U.S. dollar-denominated, fixed-rate and hybrid residential mortgage pass-through securities publicly issued by U.S. agencies in the U.S. domestic market.

The ICE BofAML U.S. High Yield Master II Constrained Index (ICE BofAML U.S. High Yield) is a market value-weighted index of all domestic and Yankee high-yield bonds, including deferred-interest bonds and payment-in-kind securities. Its securities have maturities of one year or more and a credit rating lower than BBB-/Baa3, but are not in default.

The ISM Manufacturing Index is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. The ISM Manufacturing Index monitors employment, production inventories, new orders and supplier deliveries. A composite diffusion index is created that monitors conditions in national manufacturing based on the data from these surveys.

Italy 10-Year Government Bonds—Italy Benchmark 10-Year Datastream Government Index.

The JP Morgan CEMBI Broad Diversified Index is a global, liquid corporate emerging markets benchmark that tracks U.S.-denominated corporate bonds issued by emerging markets entities.

The JPMorgan Government Bond Index—emerging markets (JPM local EM debt) tracks local currency bonds issued by emerging market governments. The index is positioned as the investable benchmark that includes only those countries that are accessible by most of the international investor base (excludes China and India as of September 2013).

The JPMorgan Government Bond Index Emerging Markets (JPM External EM Debt) tracks local currency bonds issued by emerging market governments. The index is positioned as the investable benchmark that includes only those countries that are accessible by most of the international investor base (excludes China and India as of September 2013).

The JP Morgan Emerging Markets Bond Index Global (EMBI Global) tracks total returns for traded external debt instruments in the emerging markets and is an expanded version of the EMBI+. As with the EMBI+, the EMBI Global includes U.S. dollar-denominated Brady bonds, loans and eurobonds with an outstanding face value of at least $500 million.

The JP Morgan GBI-EM Global Diversified Index is a market-capitalization weighted, liquid global benchmark for U.S.-dollar corporate emerging market bonds representing Asia, Latin America, Europe and the Middle East/Africa.

JPY vs. USD—Japanese yen total return versus U.S. dollar.

The Nikkei 225 Index (Japan Nikkei 225) is a price-weighted index of Japan’s top 225 blue-chip companies on the Tokyo Stock Exchange.

The MSCI AC Asia ex-Japan Index (MSCI Asia ex-Japan) captures large- and mid-cap representation across two of three developed markets countries (excluding Japan) and eight emerging markets countries in Asia.

The MSCI All Country World Index (ACWI, MSCI global equities) is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends.

MSCI Emerging Markets Index (MSCI emerging equities) captures large- and mid-cap representation across 23 emerging markets (EM) countries.

The MSCI World Index (MSCI developed equities) captures large and mid-cap representation across 23 developed market (DM) countries.

Purchasing Managers Index (PMI) is an indicator of the economic health of the manufacturing sector.

The Russell 2000® Index is an index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index.

The S&P 500® Index (U.S. S&P 500) measures the performance of the large-cap segment of the U.S. equities market, covering approximately 75 percent of the U.S. equities market. The index includes 500 leading companies in leading industries of the U.S. economy.

S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index seeks to measure the value of residential real estate in 20 major U.S. metropolitan areas: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa and Washington, D.C.

The S&P/LSTA U.S. Leveraged Loan 100 Index (S&P/LSTA Leveraged Loan Index) is designed to reflect the performance of the largest facilities in the leveraged loan market.

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The S&P GSCI Softs (GSCI soft commodities) Index is a sub-index of the S&P GSCI that measures the performance of only the soft commodities, weighted on a world production basis. In 2012, the S&P GSCI Softs Index included the following commodities: coffee, sugar, cocoa and cotton.

Spain 10-Year Government Bonds—Spain Benchmark 10-Year Datastream Government Index.

The Thomson Reuters Convertible Global Focus USD Hedged Index is a market weighted index with a minimum size for inclusion of $500 million (U.S.), 200 million euro (Europe), 22 billion yen, and $275 million (Other) of convertible bonds with an equity link.

U.K. 10YR government bonds—U.K. Benchmark 10-Year Datastream Government Index. For the following Datastream government bond indexes, benchmark indexes are based on single bonds. The bond chosen for each series is the most representative bond available for the given maturity band at each point in time. Benchmarks are selected according to the accepted conventions within each market. Generally, the benchmark bond is the latest issue within the given maturity band; consideration is also given to yield, liquidity, issue size and coupon.

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The Chicago Board Options Exchange (CBOE) Market Volatility (VIX) Index shows the market’s expectation of 30-day volatility.

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In Switzerland, MSIM materials are issued by Morgan Stanley & Co. International plc, London (Zurich Branch) Authorised and regulated by the Eidgenössische Finanzmarktaufsicht ("FINMA"). Registered Office: Beethovenstrasse 33, 8002 Zurich, Switzerland.

Outside the US and EU, Eaton Vance materials are issued by Eaton Vance Management (International) Limited (“EVMI”) 125 Old Broad Street, London, EC2N 1AR, UK, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority.

Italy: MSIM FMIL (Milan Branch), (Sede Secondaria di Milano) Palazzo Serbelloni Corso Venezia, 16 20121 Milano, Italy. The Netherlands: MSIM FMIL (Amsterdam Branch), Rembrandt Tower, 11th Floor Amstelplein 1 1096HA, Netherlands. France: MSIM FMIL (Paris Branch), 61 rue de Monceau 75008 Paris, France. Spain: MSIM FMIL (Madrid Branch), Calle Serrano 55, 28006, Madrid, Spain.


Dubai: MSIM Ltd (Representative Office, Unit Precinct 3-7th Floor-Unit 701 and 702, Level 7, Gate Precinct Building 3, Dubai International Financial Centre, Dubai, 506501, United Arab Emirates. Telephone: +97 (0)14 709 7158).

EVMI utilises a third-party organisation in the Middle East, Wise Capital (Middle East) Limited ("Wise Capital"), to promote the investment capabilities of Eaton Vance to institutional investors. For these services, Wise Capital is paid a fee based upon the assets that Eaton Vance provides investment advice to following these introductions.


Please consider the investment objectives, risks, charges and expenses of the funds carefully before investing. The prospectuses contain this and other information about the funds. To obtain a prospectus for the Morgan Stanley funds please download one at or call 1-800-548-7786 for the Eaton Vance and Calvert Funds please download one at or contact your financial professional. Please read the prospectus carefully before investing.

Morgan Stanley Distribution, Inc. serves as the distributor for Morgan Stanley Funds.


Hong Kong: This material has been issued by Morgan Stanley Asia Limited for use in Hong Kong and shall only be made available to “professional investors” as defined under the Securities and Futures Ordinance of Hong Kong (Cap 571). The contents of this material have not been reviewed nor approved by any regulatory authority including the Securities and Futures Commission in Hong Kong. Accordingly, save where an exemption is available under the relevant law, this material shall not be issued, circulated, distributed, directed at, or made available to, the public in Hong Kong. Singapore: This material may not be circulated or distributed, whether directly or indirectly, to persons in Singapore other than to (i) an accredited investor (ii) an expert investor or (iii) an institutional investor as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”); or (iv) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. This publication has not been reviewed by the Monetary Authority of Singapore.   Eaton Vance Management International (Asia) Pte. Ltd. (“EVMIA”) holds a Capital Markets Licence under the Securities and Futures Act of Singapore (“SFA”) to conduct, among others, fund management, is an exempt Financial Adviser pursuant to the Financial Adviser Act Section 23(1)(d) and is regulated by the Monetary Authority of Singapore (“MAS”). Eaton Vance Management, Eaton Vance Management (International) Limited and Parametric Portfolio Associates® LLC holds an exemption under Paragraph 9, 3rd Schedule to the SFA in Singapore to conduct fund management activities under an arrangement with EVMIA and subject to certain conditions. None of the other Eaton Vance group entities or affiliates holds any licences, approvals or authorisations in Singapore to conduct any regulated or licensable activities and nothing in this material shall constitute or be construed as these entities or affiliates holding themselves out to be licensed, approved, authorised or regulated in Singapore, or offering or marketing their services or products. Australia: This publication is disseminated in Australia by Morgan Stanley Investment Management (Australia) Pty Limited ACN: 122040037, AFSL No. 314182, which accept responsibility for its contents. This publication, and any access to it, is intended only for “wholesale clients” within the meaning of the Australian Corporations Act.  EVMI is exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of the provision of financial services to wholesale clients as defined in the Corporations Act 2001 (Cth) and as per the ASIC Corporations (Repeal and Transitional) Instrument 2016/396. Calvert Research and Management, ARBN 635 157 434 is regulated by the U.S. Securities and Exchange Commission under U.S. laws which differ from Australian laws. Calvert Research and Management is exempt from the requirement to hold an Australian financial services licence in accordance with class order 03/1100 in respect of the provision of financial services to wholesale clients in Australia.


This material may not be circulated or distributed, whether directly or indirectly, to persons in Japan other than to (i) a professional investor as defined in Article 2 of the Financial Instruments and Exchange Act (“FIEA”) or (ii) otherwise pursuant to, and in accordance with the conditions of, any other allocable provision of the FIEA. This material is disseminated in Japan by Morgan Stanley Investment Management (Japan) Co., Ltd., Registered No. 410 (Director of Kanto Local Finance Bureau (Financial Instruments Firms)), Membership: the Japan Securities Dealers Association, The Investment Trusts Association, Japan, the Japan Investment Advisers Association and the Type II Financial Instruments Firms Association.


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