Interesting FT article on UK neobanks: "UK fintech: neobanks may end up blending in"
Low fees mean profits have remained elusive. But higher interest rates are now compensating for that, not least with better returns on client money put out on deposit. Satisfaction scores by customers are also much higher than traditional banks. Some lessons need to be learned. Source: https://lnkd.in/emZyY76d
Open interest for bullish call contracts has soared to an all-time high for $TLT
Traders see an end to the market rout that has led to TLT’s longest streak of weekly losses since 2022. Source: Credit From Macro to Micro
The yield premium on the S&P 500 has completely disappeared for the first time in over 20 years
The US 10-year treasury now offers (theoretically) the same amount of sweet hot sauce goodness that's on offer in the stock market. Source: David Ingles, Bloomberg
Long dated bonds: are investors in denial?
As $TLT and $ZROZ duration bond funds fell in price, their assets under management kept increasing as investors just kept pouring their funds in. Source: Lyn Alden
CDS traders are sending default swaps on the big US BANKS sharply wider
- Deutsche Bank believes the rise in yields could propel Banks' Unrealized losses $140 Billion higher to a record $700 Billion. DB strategist Zeng warns the Q3 explosion in rates has no doubt widened the unrealized losses in US banks bond portfolios, which was already the catalyst for multiple bank failures this year at a time when #rates blew out to far more normal levels.
The global bond markets rout in one chart
The world's biggest bond markets hit by heavy selloff: Bond yileds hit post-crisis highs around the world: US 30y yields hit 5% before retreating. German bund yields hit 3%. Bond rout sounds alarm bells globally. Source: HolgerZ
Long-Term Bond Prices Hitting Historic Lows in Global Aggregate Bonds Index: A Cautionary Tale of Convexity?
The average price of long-term bonds has recently reached historic lows, a significant development since the inception of the Bloomberg Global Aggregate Bonds Index in the early 2000s. If the "higher for longer" narrative materializes and persists, it carries substantial implications for bond investors, especially those with long-term bond holdings. This pertains to the convexity of long-term bonds, a crucial yet often underestimated aspect of fixed-income investments. Choosing to retain long-term bonds with reduced prices and the associated lower coupon payments may lead to overlooking the attractiveness of short-term bonds, which currently offer more technically appealing yields. This decision could potentially entail a nuanced opportunity cost in the short term, especially if the 'higher for longer' scenario (which implies a soft landing) persists. Source : Bloomberg
A lot has changed over the last two years...
Source: Charlie Bilello
