The global bond rally has regained momentum due to econ concerns in the US and weak figures in the Eurozone.
Value of global bonds rose 0.3% this week to $69.29tn, almost a fresh ATH. Source: HolgerZ, Bloomberg
Is a massive regime change in markets taking place?
This week has again been volatile for stocks. But the big news for investors is for the first time in a few years, bonds are acting again as a hedge against stock market drawdowns. Or in other words: after a period of positive correlation which wrecked 60/40 portfolios, the stock/bond correlation is turning negative again. This is an important development. Source: Alfonso Peccatiello
Bank of Japan owns ~80% of the country's ETFs and 7% of the entire Japanese stock market, according to Morningstar and the Tokyo Stock Exchange data.
Moreover, the BoJ holds ~55% of the Japanese government bonds. Huge distortions 👇 Source: Global Markets Investor
An important development for portfolio construction: bonds and equities are negatively correlated again.
Source: Bloomberg, Alessio Urban
Bonds have surged higher with the collapse in interest rates and the US Aggregate Bond ETF is now up 7.7% over the past year, outperforming the Treasury Bill ETF ($BIL +5.4%)
Source: Charlie Bilello
A worrying divergence...
Source: J-C Parets
BREAKING: The 10-Year Note Yield has dropped below 4.00% for the first time since February 2024.
This comes after the July Fed meeting and ISM manufacturing data came in weaker than expected. Markets expect the first Fed rate cut since March 2020 to come at their next meeting, in September 2024. Over the last week, the 10-Year Note Yield is now down over 30 basis points. Source: The Kobeissi Letter
Junk bonds closed at an ATH (total return) last week $HYG
Source: Mike Z.
