Global Perspective January 17, 2023
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Global Perspective from the Investment Advisory Group January 17, 2023 Truist Advisory Services, Inc.
Global Perspective
The new year started with the same trends that Therefore, we remain underweight the
appeared around mid-October last year. That is a international developed markets.
weaker U.S. dollar, lower than anticipated U.S.
inflation, and lower U.S. yields. Since mid-October, In China, the swift U-turn of the zero-COVID policy
developed market equities have rallied the most, could save economic growth during the second half of
followed by emerging market equities (especially 2023. However, the lifted restrictions could mean that
Chinese equities) – a significant portion of the recent millions of people are expected to get COVID with
move has come from currency moves in the euro and unpredictable consequences.
Japanese yen. China’s re-opening was a surprise, as
the country moved away from its covid-zero policy, We also remain underweight emerging markets
Eylem Senyuz
Senior Global Macro Strategist, profoundly affecting Chinese equities in a very short assets. There is promising momentum in Emerging
Portfolio & Market Strategy period. In addition, the winter has been unusually Market equities and especially in bonds with the help
warm, especially in Europe, improving the continent’s of a weaker U.S. dollar and optimism initiated with
energy outlook (the Davos 2023 World Economic China’s reopening. Consensus assumes that China
Forum started this week with not much snow on the could deliver 4.8% growth rates in 2023 with the help
ground). of reopening efforts. We assume much lower growth
Finally, inflation in the U.S. has come in lower than rates unless China unleashes fiscal and monetary
expected, leading to a decline in the U.S. dollar stimulus at the National People’s Congress in March.
versus European and Asian currencies. While the
U.S., already experienced a technical recession in Tactical outlook (3-12 months)
2022, with Q1 and Q2 growth rates in negative Less More
territory, the slowdown in growth did not affect the Global equities Attractive Attractive
strong positive momentum in employment, personal International developed markets
income, personal spending, or industrial production. Emerging markets (EM)
The U.S. economy has the potential to achieve a Less More
similar outcome in 2023, where slowing economic Global fixed income Attractive Attractive
activity does not turn into an outright recession with International Developed Markets - Hedged
the help of a strong labor market and strong U.S. International Developed Markets - Unhedged
consumer activity. Emerging Markets Sovereign - Hard Currency
Emerging Markets Corporates - Hard Currency
Even with milder weather, a relatively hawkish Emerging Markets Sovereign - Local Currency
European Central Bank, and inflation that is trending
lower, we still expect that the uncertainties could
tip European economies into recession.
Global backdrop – Expect slower growth rates than consensus
Share in global GDP growth
economy 2023
U.S. 24%
We expect a U.S. recession in 2023 due to tighter
-0.5% - +0.7% financial conditions as most leading indicators have
turned negative.
Milder than expected winter improves the chances
of a shallower recession across Europe with gas
Europe storages above seasonal averages. Lower-than-
expected global inflation figures is also leading lower
-0.2% rates, relaxing financial conditions. Declines in the
euro reversed this year, improving the outlook for
European inflation. The European Central Bank
(ECB) will not be able to follow the Federal Reserve’s
26% (Fed) path and will likely be forced to stay put and let
the recessionary forces combat high inflation.
Emerging Asia
In China, the swift U-turn in zero-COVID policy
could deliver economic growth in the second half of
4.7% 2023, assuming the disruption that could create can
be maintained during the first half. President Xi’s
focus shifted to stabilizing China’s economy after
31%
securing an unprecedented third term. India could
achieve an 8% economic growth rate this year and
potentially deliver a 7% annualized growth rate over
the next decade propelling the country to become
the third-largest economy by the end of the decade.
Data source: Truist IAG, Bloomberg, IMF. Share in global economy based on IMF’s 2022 estimates, 2023 US GDP growth Truist
estimate, Europe and Emerging Asia 2023 GDP growth based on Bloomberg consensus estimates
IMF estimates expected to be revised down for 2023
The International Monetary Fund (IMF) is expected to revise global GDP growth estimates downward for 2023. The World Bank already reduced its 2023
world economic growth estimate to 1.7% citing higher inflation, tighter monetary conditions and continued geopolitical tensions. The 2023 global economic
activity will likely feel worse than in 2022, with many countries experiencing recessionary pressures. Setting the global financial crisis and pandemic years
aside, this year is expected to be the worst year for global growth since the 1980s.
IMF global economic growth estimates
Estimated
6.1%
Best economic growth since 1980
3.7% 3.6%
3.4% 3.3% 3.2%
2.9% 2.7%
2.9%
2.1%
Worst economic growth since 1980 Bloomberg consensus
-3.1%
2015 2016 2017 2018 2019 2020 2021 2022 2023
Data source: Truist IAG, IMF, Bloomberg
Select countries’ consensus 2023 economic growth estimates
U.S. 2023 GDP consensus estimate China 2023 GDP consensus estimate
3%
5.5%
2%
5.0%
1% 4.5%
0% 4.0%
Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22
Germany 2023 GDP consensus estimate U.K. 2023 GDP consensus estimate
3%
Recession Recession
3%
expected expected
2%
2%
1% 1%
0%
0%
-1%
-1% -2%
Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22
Data source: Truist IAG, Bloomberg, Data as of 01/16/2023
Economic data surprises – milder weather positive for European economies
Among the major economic regions, Europe has surprised to the upside. Tourism activity, especially in the Mediterranean economies, showed noticeable
improvement, and a milder winter reduced the risk of an energy crisis. Conversely, activity in the emerging market economies and the U.S. is lagging.
The Citi economic surprise indices
300 U.S. Europe Emerging Markets
Better than
200 expected
100
0
-100
-200
Worse than
expected
-300
2019 2020 2021 2022
Data source: Truist IAG, Bloomberg, data as of 12/30/2022
Global manufacturing and services surveys are in contraction territory
Globally, both manufacturing and services surveys have contracted for three consecutive months. European manufacturing is in contraction, with
Germany leading the decline.
Global manufacturing & services surveys
70
Manufacturing Services
Expansion
60
50
Both manufacturing and
40 services surveys in contraction
Contraction
30
20
2020 2020 2021 2022
Data source: Truist IAG, Bloomberg, data as of 12/30/2022
U.S. dollar – weakness continued
After December's lower-than-expected U.S. inflation report, the U.S. dollar lost some additional ground, especially against the developed markets
currencies. Pendulum for U.S. dollar started to swing favoring overseas currencies. Slower inflation, lower U.S. yields, milder winter and relatively calmer
geopolitical tensons led to a drop in the U.S. dollar. We expect the euro to appreciate to $1.20 within 12 months, Japanese yen to ¥115 = $1 and renminbi
to CNY 6.5 = $1.
U.S. dollar indexes versus developed and emerging markets currencies
40
114 Developed (l-axis) Emerging (r-axis)
43
110
46
106
49
102 Appreciation
52
98
55
94 58
Depreciation
90 61
Oct-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23
Data source: Truist IAG, Bloomberg, Developed: U.S. dollar spot index rate (left-axis), Emerging: Bloomberg custom index for emerging markets currencies including currencies of BRL, CLP, COP, MXN, PEN, CZK,
HUF, ILS, PLN, RON, RUB, ZAR, TRY, INR, IDR, KRW, MYR, PHP, SGD, THB (inverse –right axis), data as of 01/16/2023.
U.S. outperformance challenged by overseas equities
The index representing developed market equities, excluding the U.S. and Canada, rebounded significantly since mid-October. While U.S. equities
outperformed emerging markets last year, the gap has recently narrowed.
Equity index performance since Sep-2022 EFA made
significant
30.0% gains since
U.S. EFA EM mid-October
25.0% of 2022
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
Sep-22 Oct-22 Nov-22 Dec-22 Jan-23
Data source: Truist IAG, Bloomberg, EM = MSCI Emerging Markets, EFA = MSCI EAFE, U.S. = S&P 500. Data as of 01/16/2023.
Since the global financial crisis, U.S. equities outperformed overseas
markets by a large margin
Since the end of the global financial crisis, U.S. equities are the clear winner among global equity markets with cumulative returns above 250%. During
that same period international developed markets returned only 32% and emerging market equities are up only 6%. These numbers include the recent
rally in overseas equities.
Equity index performance since 2009
350%
U.S. EFA EM
300%
250%
200%
150%
100%
50%
0%
-50%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Data source: Truist IAG, Bloomberg, EM = MSCI Emerging Markets, EFA = MSCI EAFE, U.S. = S&P 500. Data as of 01/16/2023.Nine-consecutive monthly drop in food and agriculture prices
During the last nine months, global agriculture prices have dropped noticeably, indicating continued price stabilization. The latest inflation figures out of
the U.S. reflected some of this drop in food prices. U.S. inflation in future months could continue to reflect these trends.
UN food and agriculture world food price index
180
160 Nine consecutive monthly
drops in food prices
140
120
100
80
60
40
20
0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Data source: Truist IAG, Bloomberg, data as of 12/30/2022Global trade still on a strong footing but slowing
Globalization, as measured by cross-border trade, is expected to slow with embargos and sanctions against Russian products and demand. Eventually,
Russian oil exports will be diverted to countries willing to risk secondary sanctions, namely China. The recent uptick in global trade volume shows that
globalization is still alive and strong.
World trade volume index (12-months % change)
30%
20%
10%
0%
-10%
-20%
The recovery was much faster after
Prolonged trade volume drop
the COVID-related global recession
during the global financial crisis
-30%
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Data source: Truist IAG, Bloomberg, data as of 10/31/2022Most of the major economies are above pre-pandemic GDP level
S Africa E.U.
Germany Japan Switzerland
Mexico France Canada Brazil
Russia Hong Kong Spain U.K. Italy Turkey U.S. S Korea Argentina China
-6% -3% -2% 0% 1% 3% 4% 5% 7% 13%
% of GDP above pre-pandemic (end of 2019)
Data Source: Truist IAG, Bloomberg, not on scale, Data on 01/16/2023Developed Markets
Equity performance – European markets leading developed peers
Year to date, all major equity indices are up with the German equities leading its peers as the markets welcomed a milder winter and stronger euro.
Year-to-date performance of select developed market indicies
Germany 11.0%
Italy 9.6%
France 9.6%
Spain 9.0%
Australia 6.5%
UK 6.3%
Canada 6.2%
U.S. 4.3%
Japan 3.6%
0% 2% 4% 6% 8% 10% 12%
Data source: Truist IAG, Bloomberg, data as of 01/16/2023The U.S. dollar lost ground against most of the major developed currencies
The Japanese yen led the pack of G10 currencies in terms of gains versus the U.S. dollar, reversing some steep losses. Other than the Norwegian krona
or Swiss franc, all G10 currencies had a better start to the year against the U.S. dollar.
Major developed currencies against U.S. dollar
-2% -1% -1% 0% 1% 1% 2% 2% 3%
Japanese yen 2.1%
Australian dollar 2.0%
Euro 1.1%
Danish krona 1.1%
Canadian dollar 1.1%
Sterling 0.9%
New Zealand dollar 0.5%
Swedish krona 0.1%
Swiss franc -0.2%
Norwegian krona -1.0%
Data source: Truist IAG, Bloomberg, data as of 01/16/2023Mild winter, hawkish ECB, China’s rapid re-opening, and slower than
expected U.S. inflation is a tailwind for Euro
The outlook for European economies and for the euro changed significantly with a milder-than-expected winter, eliminating a sharp downturn in
manufacturing activity. The European Central Bank (ECB) remains hawkish with inflation topping in two digits. On the other hand, U.S. inflation has been
in a downward trajectory since the peak in June 2022. Currency markets usually behaves like a pendulum with momentum and corresponding news
coincides to create strong moves from one extreme to another. We expect that the euro could revisit post-pandemic high of $1.2 = €1 within 12-months.
Euro
1.3
$1.2 = €1
1.2
Truist 12-month view
1.1
1.0
0.9
0.8
Apr-20 Dec-20 Aug-21 Apr-22 Dec-22
Data source: Truist IAG, Bloomberg, data as of 01/16/2023Japanese yen – change in monetary policy, fiscal stimulus and China’s
reopening improved Japanese yen’s outlook
The Japanese yen dropped by a fifth last year as a result of significant monetary policy divergences between the Bank of Japan (BoJ) and the Federal
Reserve. The BoJ recently moved the10-year bond target yield by a quarter percent and the markets expects more. The significant change in the BoJ’s
monetary stance led to an appreciating in Japanese yen that could continue through 2023. We expect the yen to appreciate to $1 = ¥115 within 12-
months.
Japanese yen
160
150
140
130
120 $1 = ¥115
Truist 12-month view
110
100
Apr-20 Dec-20 Aug-21 Apr-22 Dec-22
Data source: Truist IAG, Bloomberg, data as of 01/16/2023We expect the British pound to reach previous lows before the general
elections in 2024
British politics experienced three prime ministers and two monarchs within a very short period. Rishi Sunak, a former Chancellor of Exchequer, became
the new prime minister after Liz Truss’ disastrous 44 days in the prime minister’s role. Political chaos led to declines in British assets, including the British
pound. Our view is the pound will likely revisit 2022 lows before the scheduled general election in 2024.
British pound
1.5
1.4
1.3
1.2
$1.1 = ₤1
1.1
Truist view until the general election in 2024
1.0
0.9
Apr-20 Dec-20 Aug-21 Apr-22 Dec-22
Data source: Truist IAG, Bloomberg, data as of 01/16/2023Major European manufacturing surveys are in contraction territory
Manufacturing surveys indicate still difficult months ahead for the Eurozone's top four economies – Germany, France, Italy, and Spain.
Select European manufacturing PMI
70 Eurozone Germany France Italy Spain
Expansion
60
50
40
Contraction
30
2020 2020 2021 2022
Data source: Truist IAG, Bloomberg, data as of 12/31/2022Christine Lagarde, President of ECB, falling way behind the 2% inflation
mandate
The current President of the ECB, Christine Lagarde, is the fourth ECB president since 1998. The first two, Wim Duisenberg and Jean Claude Trichet
finished their terms by staying very close to the ECB's 2% inflation target. The Eurozone faced deflation after the global financial crisis and the
subsequent European sovereign debt crisis, leading to an 8.8% gap in inflation during Mario Draghi's presidency. Since the pandemic, Eurozone inflation
has accelerated well above the 2% trajectory, currently 9.1% above since Christine Lagarde's appointment as President.
ECB presidents and the 2% inflation target
120
Jean-Claude Trichet
2003-2011 Mario Draghi Christine Lagarde
2003-2011 2011-
115 Wim Duisenberg
1998-2003
- 8.8%
110
105
+ 9.1%
100
95
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
Data source: Truist IAG, Bloomberg, data as of 12/30/2022Emerging Markets
Mexico and China started the year with a strong footing
Mexico and China are leading emerging market equities with outsized gains. Last year, Latin American equities have had a relatively better year with the
boom in agriculture and commodity prices. This year, Asian countries that have lagged the most of last year, have the potential to catch up to their peers if
Chinese reopening boosts demand for Asian exports.
Year-to-date performance of select emerging market indicies
Mexico 15.1%
China 12.1%
South Africa 10.4%
S Korea 10.4%
Taiwan 7.9%
Brazil 4.6%
India 1.0%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Data source: Truist IAG, Bloomberg, data as of 01/16/2023The U.S. dollar mostly weak against major emerging markets currencies
Year to date, most emerging market currencies have gained relative to the U.S. dollar, while the Peruvian sol and the Turkish lira have lost some value.
Major emerging market currencies against U.S. dollar
-1% 0% 1% 2% 3% 4% 5%
Chilean peso 4.1%
Mexican peso 3.6%
Brazilian real 3.1%
Chinese renminbi 2.5%
Korean won 2.4%
Taiwanese dollar 1.5%
Indian rupee 1.4%
South African rand 0.2%
Turkish lira -0.4%
Preuvian sol -0.6%
Data source: Truist IAG, Bloomberg, data as of 01/16/2023Emerging markets bonds started to recover losses
In 2022, emerging market bonds experienced a selloff that was worse than the global financial crisis period, and almost as bad as the worst year of 1994.
The recent recovery delivered outsized gains especially to U.S. dollar denominated bonds.
Emerging market bond returns % (12-months)
5.0% $ EM Sovereign $ EM Corporate EM Local Currency
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
-30.0%
Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23
Data source: Truist IAG, Bloomberg, $ EM Sovereign: EMB – iShares J.P. Morgan USD Emerging Markets Bond ETF, $ EM Corporate: CEMB – iShares J.P. Morgan USD Corporate Emerging Markets Bond ETF, $ EM
Sovereign: LEMB – iShares J.P. Morgan Local Currency Emerging Markets Bond ETF, data as of 01/16/2023Chinese renminbi – should settle around pre-pandemic levels
Chinese trade surplus with the U.S. closed all time high while demand for Chinese produced goods remained strong and demand from China curtailed
due to zero-COVID policies. In theory, with normalization of healthcare policies, Chinese growth rates should recover this year, lifting investor sentiment
and inflows. We expect renminbi to appreciate to pre-pandemic level within 12 months.
Chinese renminbi
7.4
7.2
7.0
6.8
6.6 $1.0 = CNY 6.5
Truist view 12-months
6.4
6.2
6.0
5.8
Apr-20 Dec-20 Aug-21 Apr-22 Dec-22
Data Source: Truist IAG, Bloomberg, data as of 01/16/2023China manufacturing and services surveys in contraction again
Recently, the Chinese government offered a growth-oriented plan to help the property markets and relaxed COVID-related rules as manufacturing and
services surveys have contracted for three months in a row.
China manufacturing & services surveys
65
Expansion Manufacturing PMI Services PMI
60
55
50
45
40 Contraction
35
30
25
2020 2020 2021 2022
Data source: Truist IAG, Bloomberg, data as of 12/31/2022China’s trade surplus with the U.S. is at an all-time high
Despite the softening global economic outlook, numerous tariffs, rules and regulations, a weaker Chinese currency and the rising prices of exports,
China’s trade surplus with the U.S. reached an all-time high in 2022.
China & U.S. trade balance 12-month cumulative ($ million)
900
800
700
600
500
400
300
200
100
0
-100
-200
'15 '16 '17 '18 '19 '20 '21 '22
Data source: Truist IAG, Bloomberg, data as of 12/31/2022Disclosures Advisory managed account programs entail risks, including possible loss of principal and may not be suitable for all investors. Please speak to your advisor to request a firm brochure which includes program details, including risks, fees and expenses. International investments are subject to special risks, such as political unrest, economic instability, and currency fluctuations. Emerging Markets – Investing in the securities of such companies and countries involves certain considerations not usually associated with investing in developed countries, including unstable political and economic conditions, adverse geopolitical developments, price volatility, lack of liquidity, and fluctuations in currency exchange rate. Truist Wealth is a name used by Truist Financial Corporation. 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S&P 500 Index is comprised of 500 widely-held securities considered to be representative of the stock market in general. Equity is represented by the MSCI ACWI captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. With 2,757 constituents, the index covers approximately 85% of the global investable equity opportunity set Fixed Income is represented by the Barclays Aggregate Index. The index measures the performance of the U.S. investment grade bond market. The index invests in a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States – including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.
Disclosures Commodities are represented by the Bloomberg Commodity Index which is a composition of futures contracts on physical commodities. It currently includes a diversified mix of commodities in five sectors including energy, agriculture, industrial metals, precious metals and livestock. The weightings of the commodities are calculated in accordance with rules that ensure that the relative proportion of each of the underlying individual commodities reflects its global economic significance and market liquidity. Cash is represented by the ICE BofAML U.S. Treasury Bill 3 Month Index which is a subset of the ICE BofAML 0-1 Year U.S. Treasury Index including all securities with a remaining term to final maturity less than 3 months. U.S. Large Cap Equity is represented by the S&P 500 Index which is an unmanaged index comprised of 500 widely-held securities considered to be representative of the stock market in general. U.S. Mid Cap is represented by the S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment. U.S. Small Cap Core Equity is represented by the S&P 600 Small Cap Index which is a measure of the performance of the small-cap segment of the U.S. equity universe International Developed Markets is represented by the MSCI EAFE Index is an equity index which captures large and mid cap representation across 21 Developed Markets countries* around the world, excluding the U.S. and Canada. With 921 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Emerging Markets is represented by the MSCI Emerging Markets Index captures large and mid cap representation across 24 Emerging Markets (EM) countries*. With 1,125 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Value is represented by the S&P 500 Value Index which is a subset of stocks in the S&P 500 that have the properties of value stocks. Growth is represented by the S&P 500 Growth Index which is a subset of stocks in the S&P 500 that have the properties of growth stocks. U.S. Government Bonds are represented by the Bloomberg U.S. Government Index which is an unmanaged index comprised of all publicly issued, non-convertible domestic debt of the U.S. government or any agency thereof, or any quasi-federal corporation and of corporate debt guaranteed by the U.S. government U.S. Mortgage-Backed Securities are represented by the U.S. Mortgage-Backed Securities (MBS) Index which covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). U.S. Investment Grade Corporate Bonds are represented by the Bloomberg U.S. Corporate Investment Grade Index which is an unmanaged index consisting of publicly issued U.S. Corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB- or higher) by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount outstanding. The S&P U.S. REIT index measures the investable universe of publicly traded real estate investment trusts domiciled in the United States U.S. High Yield Corp is represented by the ICE BofAML U.S. High Yield Index tracks the performance of below investment grade, but not in default, U.S. dollar denominated corporate bonds publicly issued in the U.S. domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody’s and S&P. Floating Rate Bank Loans are represented by the Credit Suisse Leveraged Loan Index. The index represents tradable, senior-secured, U.S.-dollar-denominated non-investment-grade loans. Global Equity is represented by the MSCI All World Country (ACWI) Index which is defined as a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI Index consists of 48 country indices comprising 24 developed markets countries and 24 emerging markets countries. Emerging Markets Equity is represented by the MSCI EM Index which is defined as a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets countries Intermediate Term Municipal Bonds are represented by the Bloomberg Municipal Bond Blend 1-15 Year (1-17 Yr) is an unmanaged index of municipal bonds with a minimum credit rating of at least Baa, issued as part of a deal of at least $50 million, that have a maturity value of at least $5 million and a maturity range of 12 to 17 years.
Disclosures U.S. Core Taxable Bonds are represented by the Bloomberg U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency). Slide 50 – EU Corporate is represented by the Bloomberg Euro-Aggregate Corporates Index which is a benchmark that measures the corporate component of the Euro Aggregate Index and includes investment grade, euro-denominated, fixed-rate securities. U.S. Government Bonds are represented by the Bloomberg U.S. Government Index which is an unmanaged index comprised of all publicly issued, non-convertible domestic debt of the U.S. government or any agency thereof, or any quasi-federal corporation and of corporate debt guaranteed by the U.S. government. U.S. IG Corporate Bonds are represented by the Bloomberg U.S. Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes U.S.D denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers. U.S. High Yield Corporate Bonds are represented by the ICE BofAML U.S. HY Master Index which is an index that tracks U.S. dollar denominated debt below investment grade corporate debt publicly issued in the U.S. domestic market. S&P 500 Information Technology Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the information technology sector based on GICS® classification. S&P 500 Financials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the financials sector based on GICS® classification. S&P 500 Energy Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the energy sector based on GICS® classification. S&P 500 Materials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the materials sector based on GICS® classification. S&P 500 Industrials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the industrials sector based on GICS® classification. S&P 500 Consumer Discretionary Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the consumer discretionary sector based on GICS® classification. S&P 500 Communication Services Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the communication services sector based on GICS® classification. S&P 500 Utilities Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the utilities sector based on GICS® classification. S&P 500 Consumer Staples Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the consumer staples sector based on GICS® classification. S&P 500 Health Care Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the health care sector based on GICS® classification. S&P 500 Real Estate Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the real estate sector based on GICS® classification. ©2022 Truist Financial Corporation. Truist®, the Truist logo, and Truist purple are service marks of Truist Financial Corporation. All rights reserved. CN2022-5417239.1 EXP 01.2024
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