A fresh increase in the Atlanta Fed’s GDPNow model reinforces the reasoning behind hawkish-for-longer monetary policy, which is weighing on equities and bonds
The latest model estimate shows real 3Q GDP growth of 5.9%, up from 5.8% on Aug. 16 (it was less than 4% two weeks ago). Source: J-C Gand, Atlanta Fed
Since the COVID Crash lows in March 2020, US equity markets have more than doubled the performance of bonds
As shown below, that's the best performance ever over a similar time window, topping the strongest stocks-bonds outperformance from the tech bubble of the late 1990s and early 2000s. Source: Bespoke, J-C Gand
This week has seen the biggest set of 'bad news' since April...
And that bad news prompted a very aggressive bid for global bonds with USTs tumbling 8-12bps on the day, leaving the long-end down 9bps on the week (but 2Y +2bps still) Source: www.zerohedge.com, Bloomberg
Duration risk in one chart. $1 million invested in this Apple AAPL bond is now worth $600k, duration risk is on stage here.
Now think of all those mortgage-backed securities on bank balance sheets... Source: Lawrence McDonald, Bloomberg
Higher real bond yields create a challenge for global equities valuations
Source: Bloomberg
Nice one by Steno research
While there are some fundamental reasons for US Treasury yields to keep rising (check out the Atlanta Fed Nowcast model poiting towards nearly 6% annualized real GDP growth in 3Q), what is currently going in China probably has some impact as well Source: Stenio research
The last time US 10Y yields were this far above sp500 dividend yields was sept/oct 2007 (BNP Paribas funds liquidate, Fed slashes rates, market peaks...)
Source: Bloomberg, www.zerohedge.com
This is not the price chart of a meme stock going under or a "pump and dump" altcoin
This is the Austria AA+ 100 year bond being hammered by the rise of bond yields... The price of the 100 year Austrian government bond has plunged near all-time lows and is trading 72% below its All-Time-High. Source: Bloomberg, HolgerZ
