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31 Oct 2023

With the US 10-year yield close to 5%, long duration bonds start to look attractive

There is one issue though: sentiment on long-dated bonds look too optimistic E.g 1/ not a single sell-side analyst does have a 10-year target yield above 5% for the next 6 months; 2/ Long-dated bonds funds are enjoying record inflows; 3/ Magazine cover pages look upbeat on bonds (source: J-C Parets). The consensus is not always wrong but so much optimism is usually not a good sign from a contrarian perspective.

27 Oct 2023

The Greatest Treasury Bear Market in History

Source: BofA, Barchart

27 Oct 2023

Adding to that Great Rotation theme is this chart

US households account for 73% of Treasury bond buying in 2022-2023 (so far) A lot of pain being experienced for those not willing to hold to maturity amid this bond blood bath... Source: Markets & Mayhem, Goldman Sachs

26 Oct 2023

How long does it take for the FED to break the corporate bond market?

2008 : 1 year of plateau, resulted in credit event after another 1 full year. (Total 2 years) 2020 : 7 months of plateau, resulted in credit event after 6 months. (Total 13 months, 54% of 2008) 2023 : it's been 3 months into plateau so far. Chart made from MacroMicroMe - source: James Choi

26 Oct 2023

US deficit is doubling as US Economy grows shows why yields are at 5%

Source: Bitcoin magazine

25 Oct 2023

Equities tend to sell off with bonds when interest rates rise beyond 5%

Source: GS, TME (European equities in this case)

25 Oct 2023

This chart illustrates another factor contributing to the increase in US bond yields:

Concerns about the govt's ability to manage its debt responsibly. The price of insuring against the possibility of the US government defaulting on its obligations (CDS Price) has recently jumped Source: HolgerZ, Bloomberg

24 Oct 2023

10-Year Bond Yields

USA 5.00% Greece 4.36% Source: Bloomberg, Lawrence McDonald

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