The threat list to global markets lengthens, but the Truth will be found in the bond markets. Like inflation and rising rates, the effects of a bond market slide are lagging – It’s going to take other financial assets time to catch up on the bond crash!
Who are we trying to fool? Rising bond yields, higher for longer rates, recession fears, crashing consumption, yet stocks believing earnings could still push them higher? Are we at risk of a realisation moment and a repeat of 1987 or maybe something worse?
Markets are treading water trying to figure out directions – some of the underlying narratives look alluring, but they are not all they seem. In confused, uncertain markets, the trick is to remain suspicious of what others are following.
I’m polishing up my buying boots in anticipation of a fantastic buying window in the near future. All I need is the current everything bubble to burst under the deadweight of FOMO and unsustainable valuations! And things really ain’t looking so bad!
Everyone seems worried about the sustainability of Sovereign Bonds in terms of rising rates, interest burdens, debt quantum, and who will keep buying. Relax. Bonds have weathered worse. But there are ways to use Sovereign debt better.
The market has chosen to read the Fed 25pb hike as a positive sign we’re on the glide path to a soft landing – but what does the market know? The charts and common sense increasingly scream recession. Take your pick: deflationary bust or stagflationary crisis?
Stocks are looking forward to a double dose of joy from strong tech earnings and the Fed close to end of the tightening phase, but these may be Potemkin Markets.. foundations in the sand and little behind the façade… says the grumpy bond trader…
Markets are focused on the immediate debt-ceiling crisis, and the short-term game of guessing rates vs inflation. Down the line are the bigger challenges of the medium and long-term: issues we need to be investing in now to garner long-run returns or just to survive!
Markets are taking a breather after the recent wobbles, but the threat board has never looked, well, more threatening! Relax. Go see Guys and Dolls instead and treat yourself to a great night out.. tomorrow it will be miserable again!
The Fed tries to be dovish to calm market fears, but banking fears and inflationary threats on the economy may lead us somewhere new: A Stagflationary Bust!
