The rally in interest-rate-sensitive stocks could never last. The bubble would always expire when central banks refrained from more meddling and we may have reached this point. Bond yields are rising as policymakers, acknowledging that monetary policy has reached its limits, are turning to fiscal policy to prod economies. Amid a rise in global bond yields, a 50-basis-point jump in Australian 10-year government bond yields pummelled Sydney Airport by 14% and lopped 9.3% off Transurban over the past two months. During that time, REITs were slammed 12% and utilities 6.2%. The S&P/ASX 200 Accumulation shed only 1.7% over September and October. The worry for yield plays is that the rise in global bond yields looks entrenched. Be prepared for turbulence if yields rise faster and by more than expected. (VIEW LINK)
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