Posts Tagged ‘managing risk’
The Great Rotation
When market themes change, they can be very subtle from one sector to the other. For example, tech to oil short term bonds to long term or from one region to another. A few of these types of changes happened over the last couple of months I think are worth exploring. The last decade…Read More
Tech Wreck 2.0
It’s quite clear certain parts of the market such as crypto, saas and other duration linked assets in Tech has recently had a fall from grace reminiscent of the .com bust. How deep this goes will depend purely on central bank policy, of which I’ve tried to argue a fall in risk assets is actually…Read More
What To Expect from The Fed This Week?
This Wednesday the Fed will be announcing its next rate hike. Reading over some of the commentary from fed speakers we can see that 50BPS looks to be on deck. This has also been priced in by the market as we can see below in the Fed watch tool by the CME. We will also…Read More
After Inversion Comes?
In my first note, I asked the question, will the yield curve invert? With 5s30s and more importantly the 2s10s inverting on 31/03/22, the guessing game is over! The inversion although an important part to start a countdown on a risk off set up. It’s a steepening of the yield curve that comes after an…Read More
The First Warning Signs
The bond market and in particular certain yield curves are starting to flash warning signs: 5s-30s inverted this week for the first time since 2006. This information is useful and not so useful depending on your time horizon. Let’s answer why it’s useful first, it’s telling you in simple terms that growth will slow, and…Read More
Don’t Fight the Fed
The phrase “Don’t fight the Fed” is normally attributed to the reaction function of central banks once a crisis is underway. What does it mean? Simply put, once risk assets have been sold off, normally the Fed would step in and buy bond, i.e., quantitative easing plus cut interest rates, this would provide liquidity therefore…Read More
Will The Fed Hike in March?
With the war between Russia and Ukraine dominating headlines inflation numbers not seen since the early 80s and what could be the first Fed rate hike this month. I want to break down how different Fed speakers are looking at how much to hike by. At a very basic level we can say that…Read More
Is The Yield Curve About to Invert?
Since Q4 of 2021 to today we have had wild swings within fixed income markets. As G10 central banks have taken notice of rising inflation and bit by bit have had to drop the “transitory inflation” line. This has led to the front end (2 Year yields) rising dramatically and pricing in a more hawkish…Read More
Chapter 12 – Past Performance VS. Future Potential
While you will no doubt have seen many notices about past performance being no guide to the future, you should certainly consider how an investment you are thinking of making has performed historically, and you should review their approach to managing risk too. Investment returns tend to be cyclical. One style or market segment…Read More