Almost exactly a month ago, I wrote that I was anticipating a near-term correction that would likely be precipitated by weaker-than-expected earnings.

The beginnings of that pullback came a bit earlier than I thought they would, driven at first by renewed worries over Spain’s fiscal situation and a weaker-than-expected March jobs report. Then China’s disappointing first-quarter gross domestic product (GDP) growth added to the market’s woes.

Despite their negative impact on the markets, I don’t believe any of those factors merit much concern on an individual basis.

Spain is a bit of a wild card given that recent news points to the fact that the country’s fiscal situation could be worse than initially believed.

On March 2, the country announced that it wouldn’t meet its 2012 deficit reduction goal. That sparked an almost immediate spike in yields on Spanish sovereign bonds and a corresponding jump in Italian bond yields, as investors speculated that Spanish banks might require a bailout.

While it would have been best if Spain had been able to hit its deficit reduction targets, the country is still making inroads toward that end by making cuts to spending on health and education, among other programs. Additionally, regulatory authorities are also taking steps to shore up the country’s banks. At the same time, Spain is experiencing solid export growth and its labor costs have fallen amid the country’s difficulties. Under Prime Minister Mariano Rajoy, the country is making progress toward improving its beleaguered economy.

As far as the March employment report goes, I don’t believe there’s much to be worried about there either. The economy added an average of 250,000 jobs in each of the three prior months, while only about 120,000 new positions were created in February. Hiring in the construction and temporary help sectors both took big dips relative to prior months and that pulled the overall March reading down.

The dip in construction hiring in February and March was likely weather-related, especially since construction added an average of 22,000 jobs in December and January. This winter was unseasonably warm and construction crews were able to get a much earlier start on projects that normally wouldn’t have commenced until later in the spring. So the decline in hiring for this sector was likely due to the fact that construction firms got ahead of demand.

The drop in temporary hiring also occurred after strong hiring over the prior seven months. March saw the loss of about 7,500 positions after gains averaging about 27,000 jobs a month in August through February. One data point doesn’t make a trend, so the March reading for this sector is not a great concern.

While I believe the issues with Spain and the employment report are transitory, I do think the first-quarter earnings season will be challenging due to the fact that companies will face more difficult comparables with their earnings. And with the market trading near five-year highs, investors will continue to spook easily. So I expect the correction to continue, with the market’s positive performance earlier this week as more of a relief rally.

Still, I don’t think the economy is taking a fundamental turn for the worse. A more defensive posture may be warranted, but there’s no reason to go to cash.

What’s New

Last week, most of the new launches focused on high-yield funds.

iShares launched three high-yield funds. iShares Global ex USD High Yield Corporate Bond Fund (BATS: HYXU) tracks the Markit iBoxx Global Developed Markets ex-US High Yield Index, an index built from non-investment grade debt issued in developed markets. All dollar-denominated debt is excluded from the index, with about 81 percent of holdings denominated in euros, 11 percent in British pounds and 8 percent in Canadian dollars.

The fund will hold about 100 individual high-yield corporate issues. The fund’s holdings are a bit unusual, with Luxembourg accounting for about 16 percent of assets and the Netherlands receiving a 15 percent weighting, and France and Germany weighted at 15 percent and 11 percent, respectively. There aren’t many funds that emphasize Luxembourg and the Netherlands over their larger peers. The average coupon runs about 8 percent with an average duration of 3.8 years. The fund charges a 0.40 percent annual expense ratio.

iShares Emerging Markets High Yield Bond Fund (BATS: EMHY) tracks the Morningstar Emerging Markets High Yield Bond Index, which is comprised of about 170 dollar-denominated non-investment grade emerging market bonds. The fund’s annual expense ratio is set at 0.65 percent.

Venezuela is the most heavily weighted country at 19 percent of assets, followed by Turkey at 15 percent, the Philippines at 12 percent, and smaller allocations to Russia, Hungary, Mexico and Lebanon. In all, more than 20 geographies are represented in the fund.

Given the weightings, the fund differs from other emerging market bond funds in that it doesn’t overweight the traditional BRIC (Brazil, Russia, India and China) countries.

And its more than 7 percent yield is actually less than that of iShares Global ex USD High Yield Corporate Bond Fund, which focuses on developed markets. That’s an interesting reflection of the fact that so many investors remain concerned about developed-world balance sheets.

The third launch was iShares Global High Yield Corporate Bond (BATS: GHYG). The fund mimics the Markit iBoxx Global Developed Markets High Yield Index, which tracks about 600 junk-rated bonds issued primarily in dollars, pounds and Canadian dollars. The holdings tilt heavily toward the US, which accounts for roughly 70 percent of holdings.

The fund’s average yield is about 8 percent and it charges a 0.40 percent annual expense ratio.

The final launch last week was iShares Morningstar Multi-Asset Income Index Fund (BATS: IYLD). A fund of funds, the exchange-traded fund (ETF) uses other iShares ETFs to build an all-in-one fund. It allocates 60 percent of assets to fixed income, 20 percent to equities and 20 percent to alternatives such as real estate investment trusts (REIT).

The fund charges a 0.25 percent management fee, but its total expense ratio will run in the neighborhood of 0.60 percent once the expenses of the underlying funds are taken into account.

Portfolio Roundup

As I mentioned earlier, China recently released its first-quarter GDP data, which proved disappointing to investors. The Chinese economy’s 8.1 percent growth in this year’s first quarter versus the prior year marks the slowest pace of growth since the first quarter of 2009. The country’s real estate and export sectors both slowed significantly in the quarter.

We’re not too terribly concerned about further declines, however. While the Chinese government has set its GDP growth target this year at 7.5 percent, we expect the government to take stimulative measures if it sees growth dipping below 8 percent. Given the tightening that has occurred over the past two years or so, the Chinese government has plenty of room to lower bank reserve ratios and take other steps toward monetary easing.

We continue to rate Market Vectors China ETF (NYSE: PEK) a buy below 55.