Where A Bond Guru Is Finding Value

Top bond fund manager Stephen Smith thinks that three key factors — oil’s decline, interest rate declines, and tumbling non-US currencies — will lead to better-than-expected global growth.

Smith tells WealthTrack’s Consuelo Mack that declines in oil prices typically begin to impact the economy about 9 months later. And typically, for every $20 decline in oil prices, developed markets (after the 9 month lag) see a 0.4% increase in GDP, he says. Emerging markets, being more dependent on oil to grow, see a 0.8% in GDP. Smith thinks another global stimulus may come from emerging market countries that raised rates last year but will now lower rates, like Russia and Indonesia. He is currently finding opportunities in government bonds in Brazil, India’s currency, and Indonesian government bonds.