.jpg)
If you have reading this for any length of time, there is no introduction needed. But let's first go back to two seminal earlier writings and then catch-up with present day events that consistent with history...
1
ARTICLES OF NOTE
Red
Investors Are Often the First Casualties of War
From Waterloo to the Ukraine crisis, fears of conflict have moved interest rates, boosted commodities prices and won (and lost) people fortunes.
.jpg)
2 Niall Ferguson, MA, D.Phil., is the Milbank Family Senior Fellow at the Hoover Institution, Stanford University, and a senior faculty fellow of the Belfer Center for Science and International Affairs at Harvard. He is the author of sixteen books, including Doom: The Politics of Catastrophe and Kissinger, 1923-1968: The Idealist, which won the Council on Foreign Relations Arthur Ross Prize. In addition to writing a syndicated weekly column, he is the founder and managing director of Greenmantle LLC, an advisory firm
Posted: Jul 26, 2022
Posted: Jun 30, 2022
Posted: Aug 20, 2021
CURRENT EVENTS:
The Importance of Pelosi and Taiwan on Bond Swings
But cold feet remain. Yields have dropped precipitously in recent weeks, despite the lack of any clarity that inflation is over. And that led to an extraordinary trading session Tuesday as they boomeranged back upward. House Speaker Nancy Pelosi can claim a starring role with her fraught visit to Taiwan. Barring only the two worst days of the first Covid shutdown, and the Monday in June when the Fed leaked its intention to hike by 75 basis points at its next meeting, this was the biggest daily gain for 10-year yields in five years
How has this happened? Over the last 40 years, whenever the trend appeared to be about to break, the Fed would respond with cheaper money and bring yields back down again. Its emergency response to the pandemic helped rates to drop to record lows in 2020. With the return of inflation, that pattern appeared to have broken, leading to this year’s surge in yields. But since June, it has been as though the market trod on a rake. Ten-year yields dropped by a full percentage point:
At present, the Bloomberg Global Aggregate Index, which tracks total returns from investment-grade government and corporate bonds, has slumped roughly 12% since the beginning of the year — a significant move for an asset that is prized for its stability. The broader ramifications are severe, as bonds have not played their usual diversifying role in contrast to equities, raising doubts on the endurance of the classic “60/40.” According to Bloomberg’s index, a 60/40 portfolio in the US would have lost 19% for the year until bonds’ June turn.
How do we explain that pivot? Evercore ISI’s Ed Hyman, who started the year expecting 10-year yields to reach into a range between 4% and 5%, offers this handy checklist of all the events of the last seven months that have given investors an incentive to buy bonds once more. They are in roughly descending order of importance — profound for the Ukraine invasion, more ambiguous for other developments1. Russia’s invasion of Ukraine2. House Speaker Nancy Pelosi’s trip to Taiwan3. Likelihood of getting financial shock or crisis4. Plunge in M2 growth, the broadest measure of money supply5. Various signs inflation is cooling6. Weakness in housing market7. Economy in recession8. Disaster in Europe9. Middle East risk10. Climate change
.jpg)
No comments:
Post a Comment