Trying to hear what's not being said
January 7, 2025 Leave a comment
British 30 year bond yields are in todays financial market news.
Much being said about their new highs being made.
It’s OK, they can float around here (+/- 1%).
They might be a little stretched but not at an extreme.
Same goes for #British 10’s.
January 7, 2025
rob@karriasset.com.au
#gilts
August 8, 2024 Leave a comment
In the near-term, I think that the decline in U.S. bond yields should take a little pause.
They are now trading 2.5 standard deviations below their rolling 20 week moving average.
This will be mentioned in this week’s edition of my Macro Extremes newsletter.
In the April 19, 2024 edition of Macro Extremes, the U.S. 20 year bond yield appeared in the overbought extreme list and inversely, the iShares 20+ year treasury bond ETF (TLT) was in the oversold category.
The mid point for trading in the TLT around the last 2 weeks of April 2024 was ~ $88.46.
This week, the TLT is trading at 2.5 standard deviations above its 20 week moving average.
This week’s mid point price is $97.92.
Over the past 4 months……………that represents a capital return of 10.7% and when adding $1.22 per share of dividends received, the total return is a handsome 12%.
Who said bonds are boring.
Over the mid-term, I think bond yields will continue to fall.
August 8, 2024
by Rob Zdravevski
rob@karriasset.com.au
July 12, 2024 Leave a comment
U.S. inflation has nearly reverted back to its 200 week moving average.
Whether it sees 2% or not, is mute. It has abated and mean reverted.
Such mean reversions are honoured more so after such parabolas.
The bet is now whether interest rates follow……and what that means for various asset classes and business sectors.
The U.S. 2 year government bond yield is the orange line.
July 12, 2024
by Rob Zdravevski
rob@karriasset.com.au
June 10, 2024 Leave a comment
One chapter in the upcoming great bond yield mean reversion……
“Real” interest rates are at same levels seen 20 years ago, as represented by the U.S. 10 year bond minus 10 year inflation break-even rate.
They are also at the same levels seen in 2007 and 2008.
It’s the anti-thesis of the returns available (or money lost) in #bonds during the 2020 and 2021 TINA (“There Is No Alternative”) era for equities.
I’m fancying public bonds, not “private credit”.
June 10, 2024
by Rob Zdravevski
rob@karriasset.com.au
May 20, 2024 Leave a comment
I think U.S. inflation can still decline to the 1.8% mark, somewhere around October 2024……
and all that comes with that for interest rates, commodity prices, growth equities and/or commercial real estate.
May 20, 2024
by Rob Zdravevski
rob@karriasset.com.au
For my past quips, search “inflation” at https://robzdravevski.com/?s=inflation
May 16, 2024 Leave a comment
Whilst the AUD/USD is currently in a medium and longer term upward trend, I think that it looks constrained around the 0.6750 – 0.6722 mark.
My read is that it needs make a ‘higher high’. If not, the AUD/USD will continue its digestive and consolidation pattern lower.
and so….it would go for commodities and bond yields.
May 16, 2024
by Rob Zdravevski
rob@karriasset.com.au
October 4, 2023 Leave a comment
Here are the 10 notable moments over the past 50 years when the U.S. 10 year bond yield had entered Monthly overbought territory while also being at a certain percentage above its 50 month moving average and also trading up to 2 standard deviations above its rolling monthly mean.
And today many are still betting that yields rise (and bond prices fall)…..
October 4, 2023
by Rob Zdravevski
rob@karriasset.com.au
June 21, 2023 Leave a comment
British 10 year government bond yields are seldom this distance above its 200 week moving average while simultaneously registering a weekly overbought reading.
Forgetting Bank of England policy rate setting, I can see these 10’s back down around 2.40% over the coming 9-15 months.
Demand destruction commensurate with decline in GDP will aide this thesis.
June 21, 2023
by Rob Zdravevski
rob@karriasset.com.au
May 30, 2023 Leave a comment
In this note on March 16, 2023 (March 15, U.S. time), I suggested that shorter-term interest rates would start to rise when the Copper/Gold Ratio trades 2.5 standard deviations below its weekly mean and implies a poor moment of timing for those buying bonds.
As a follow up, the chart below shows what has happened to the U.S. 2 year bond yield since then.
Having risen from 3.9% to 4.68%, that extreme standard deviation low in the Copper/Gold Ratio did represent a ‘bull trap’ for bond buyers.
May 30, 2023
by Rob Zdravevski
Karri Asset Advisors
rob@karriasset.com.au
March 10, 2023 Leave a comment
Here are 3 general moments when U.S. 2 year bond yields were extended.
We’re amongst one of those moments now.
If you are not a buyer of bonds, this study also implies that you shouldn’t lock in or fix your borrowing rate.
I predict a large hyperventilating fear campaign from banks and mortgage brokers trying to convince borrowers to lock in their interest rates.
In turn, real estate agents will try to persuade their vendors to lower their selling prices because “rates are going much much higher”.
I think this is another case of ‘people doing the wrong thing, at the wrong time’.
March 10, 2023
by Rob Zdravevski
rob@karriasset.com.au
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