Socialism is making inflation great again
Local market started negative on US lead and remained weak as Aussie 10 year bond yields ran past 1.40% as reflation starts to weigh on stretched market multiples. All sectors were red except for miners and energy on reflation. The market would been down double without the miners. Banks were flat but that helped to limit damage as well. The market is dealing with upgrades from reporting season not matching up to the multiple reduction from the flying bond yields. US 30 year long bond yield is now at pre pandemic level above 2%. Aussie 10 year bond yield is 1.40% after bottoming at 0.56% in the pandemic crash.
US Fed presidents are all talking about letting the yield run. Inflation likely to take off in the next few months and 10 year bond yields are going to test 2%. More stimulus and USD debasement is inevitable or the US economy tanks. Socialism is only going to make reflation worse and that is not good for markets and asset prices.
Comments on US market last close > US market was mainly flat to slight negative as bond yields fly on reflation. US 10 year near 1.30% and 30 year near 2.09% as multiple Fed presidents keep supporting the view of letting bond yields run. DOW was slightly positive with S&P flat while NASDAQ and RUSSELL were down. USD bounced and hit gold but reflation driving copper while US weather keeps oil supported. Reflation will test market multiples sooner than later as rising yields create financial stress.
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy!!!
End of day market stats are on the attached link/pdf.
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Over 25 years’ experience in the finance/tech industry. Mathan has worked extensively in all parts of the finance sector (i.e. County NatWest, Citi, LIM, Southern Cross, Bell Potter, Baillieu Holst and Blue Ocean Equities). Currently Founder and...