Over-optimistic sentiment can stay extended / “stretched” for long periods of time.
Over-optimistic sentiment can stay extended / “stretched” for long periods of time. Source: Goldman Sachs
These charts by Bank of America show that every single episode of a local peak in UST 2yr yield was followed by some risk-negative event over the past 40 years.
These #charts by Bank of America show that every single episode of a local peak in UST 2yr yield was followed by some risk-negative event over the past 40 years. Such episodes ranged from mild (Mexican peso crisis in Dec 1995; HY +95bp) to moderate (Asia FX crisis in Oct 1997; HY +350bp ) to severe (GFC; HY all-time wides). The lag between the peak in 2yr yield and subsequent event varies from just a couple of weeks to just over a year, with an average being 7 months. Source: BofA, www.zerohedge.com
New cobalt, copper, lithium and nickel mines needed
Per a McKinsey report, the current 500 cobalt, copper, lithium and nickel mines operating today will need to almost double to 900 in order to meet battery demand. Almost 80% increase in mines needed.
Bank of Canada raises key rate by 25 bps to 4.75% vs. 4.5% est.
The Bank of Canada defied expectations by restarting its interest-rate tightening campaign, saying the economy is running too hot.
Source: Bloomberg
Italy Maintains Investment Grade Status: Moody's Decision Confirmed!
In a crucial development for Italy's economic landscape, Moody's has confirmed the nation's BBB- sovereign debt rating after conducting a comprehensive review of its credit profile. This decision reinforces Italy's investment grade status, providing stability and reassurance to the market. The anticipated outcome is evident in the behavior of the spread between Italian and German 10-year yields, which has remained steady, along with remarkably low volatility in this spread over the past few weeks. Source: Bloomberg
Favouring high-quality bonds over other asset classes in the coming months?
BofA's traditional monthly survey of global fund managers has been released and shows that investors are the most overweight bonds over stocks since March 2009! Investors are also the most record longs in Investment Grade vs. High Yield since inception (2015). Source: Bank of America
Largest weekly outflow since 2020 in U.S. High Yield bonds!
Last week, one of the largest ETFs tracking U.S. high yield bonds, the HYG or iShares iBoxx HY Corporate Bond ETF, had its largest outflow since 2020. Valuations are stretched in high yield despite solide fundamentals. Any spike in equity volatility could quickly negatively impact this segment. Source: Bloomberg
Global bond sales to record start!
In less than three weeks, governments and corporates raised nearly $600 billion in new financing, a record. This new record was helped by both the best start ever for global fixed income indices and the largest inflow into investment grade bonds in over a year. Source: Bloomberg
