Why RiverFront is not yet concerned about recent rise in rates
Past performance is no guarantee of future results. Shown for illustrative purposes. Not indicative of RiverFront portfolio performance.
After a prolonged period of hovering near all-time lows, the US 10-year Treasury yield has been on the move lately (see chart). This is not wholly unexpected, nor it is necessarily something for the stock market to be concerned about, in our view. In RiverFront’s 2021 Outlook, both our base case and bull case scenarios for stocks predicted rates rising this year; at the upper end, we predicted a range as high as ~1.80% on the US 10-year Treasury.
Gold Blues as Silver Woos
February was a tough month for gold, which marked its worst monthly performance since November 2016. Spot gold fell $114/oz, or 6.15%, to close the month at $1,734/oz. Half of this decline came in the two final days of February, as bond selling spiked into near panic mode and triggered a multi-asset sell-off into month-end. Figure 1 shows how gold has been inversely correlated to bond yields.
February’s pullback occurred on the back of various developments. Rising energy prices and the markets’ view on U.S. government spending bolstered the reflation trade with a rally in broader equity markets. The U.S. dollar strengthened as markets priced in a swift economic recovery and as U.S. Treasury yields advanced to the highest level in a year, with the 30-year bond rising above 2% and the rapid move in the 10-year to over 1.5%, which we will discuss in more detail. Meanwhile, gold ETFs saw holdings decline towards the end of February. Silver prices held up m
WASHINGTON (dpa-AFX) - The market might react to the announcement of the Labor Department's Job Openings and Labor Turnover Survey or JOLTS on Thursday. Early signs from the U.S. Futures Index
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NEW YORK (Reuters) - A global economic recovery from the coronavirus pandemic could send inflation sharply higher in the year ahead, boosting the appeal of assets ranging from the shares of regional banks to some government bonds, Lipper Award-winning fund managers said.
FILE PHOTO: A man is reflected on a stock quotation board in Tokyo, Japan February 26, 2021. REUTERS/Kim Kyung-Hoon
Concerns about rising inflation have stalled the more than 70% rally in the S&P 500 since its pandemic lows last March as investors price in higher borrowing costs for companies and consumers.
Benchmark 10-year Treasury yields are near 13-month highs, while the break-even inflation rate on 10-year Treasury Inflation Protected Securities, a gauge of expected annual inflation over the next 10 years, hit its highest level since 2014 on Monday.