Category: Daily Instagraph

One reason why long-term treasury yields have been increasing and bond investors are suffering has nothing to do with the Fed and the view on inflation. There are structural sellers of long-term Treasuries around: China for example has decreased its holdings substantially over the last decade. Reasons are multiple and complex, from de-dollarization, economic to … Continued

Crescat Capital published the below graph summarizing the current bull case for gold and explaining why we could be currently at the beginning of the third gold cycle since the 70s. While we do not like the fact that gold does not produce any cash flows and remuneration for its owners, we admit that the … Continued

The private equity world has started to see a slowdown. According to the yearly private equity study from Bain Capital, global investments, exits and fund raising  declined significantly in 2022. They stay nevertheless at very respectable levels compared to the last decade. We would not be surprised to see a further slowdown of activity in … Continued

The inflation-adjusted 10-year US government bond yield is nearing 2.4%, its 20-year top. These 2.4% carry no equity risk, no risk to be eaten up by inflation and no corporate default risk. If you believe that the US Treasury will be able to honour its debt, this appears a juicy real return. Time to buy … Continued

As we are entering the Q3 result season, it is important to remember that the yield on US 6 month Treasuries is now more than 1% higher than the earnings yield of the S&P 500. Literally investors are currently paying up to take equity risk, which appears counterintuitive to say the least. This has not … Continued

As we explained in yesterday’s daily, performance of the traditional 60/40 portfolios has been suffering since central banks started to hike rates. The main reason is the positive correlation between stocks and bonds. As illustrated in the below graph from Crescat Capital, this is a new regime after 2 decades of negative correlation and a … Continued

The classical US 60/40 portfolio composed of 60% of equities and 40% government bonds had another 7% loss over the last 3 months. From a historical perspective, these successive important drawdowns seen over the last 1 ½ years are truly remarkable. It looks like combining bonds and equities in portfolios to make them more defensive … Continued

With the 10 year US and German government bond yields at a juicy 4.6% and 2.8% respectively, investors are increasing the allocation to bonds. This makes sense as the interest-rate hikes by central banks may be close to done and peak rates reached. 2 caveats: First, as the y-t-d negative performance of bonds has again … Continued

US banks are currently sitting on more than 400 bn USD of unrealized losses in their bond portfolios. The  amount of losses is at an all-time high and 10% higher than at the beginning of the year, just before the collapse of Silicon Valley Bank. We believe this duration mismatch between long term assets and … Continued

Hamas surprise attack on Israel is triggering fears of an oil supply chock. The Wall Street Journal reported Iranian security officials helped Hamas plan on its attack on Israel. If this proves correct, the risk of further destabilization in the region is high especially in case of a retaliation by Israel considering Iran is a … Continued