Rate sensitive stocks: Buy when there is blood on the streets

Livewire Exclusive

The US 10-year yield has jumped from 1.8% to 2.2% over the week since Trumps’ election, triggering significant damage to interest rate sensitive stocks. Yet Trump won't be inaugurated for two months, and there is little clarity on which policies he will follow through on, let alone which could even pass Congress. So are we witnessing a knee-jerk reaction in the bond market, and is the equity selloff justified? We interviewed Tim Hannon, CIO of Newgate Capital Partners to gain some insight. Tim told Livewire: “There is a huge amount of conviction that rates are going higher, but without any analysis - in particular whether fiscal stimulus can even occur in the US. Securities have corrected significantly, and strategists are saying it’s a good time to sell. That would have been good advice three months ago, but is poor advice today.“ In this short interview Tim describes his thesis in more detail, and discusses a Toll road company paying around 4.6% yield, expected to increase to more than 10%, based on current price.


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