A Paradox

A Paradox

Apparently undeterred by the bond tantrum and accompanying equity jitters, investors poured a sizable $22.2 billion into stocks in the period through March 3, the latest EPFR data showed. Perhaps "undeterred" isn't quite accurate. The breakdown, summarized by BofA, shows "just" $6.3 billion went to US shares, with small-caps and value dominating, while large-caps and growth lagged (the latter saw a $2.5 billion outflow). That suggests a "go with it" approach to rising yields. Still, tech inflo
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5 thoughts on “A Paradox

  1. Not saying there is cheating going on anywhere in the financial markets or the plumbing, but the only way to make money consistently seems to be to know what the “reaction function” is going to be before other market participants.

    Otherwise, every expert has their opinion. The most recent example is where the Fed is going to go YCC. Nobody knows anything and it’s just operating in a world of probabilities.

  2. The Fed willing to tolerate 10-year yields above 1.50% and 30s over 2.25% is not a bad thing. Yes, bond proxies, EM, housing prices, and gold and bitcoin wil take a hit — but that wil create buying opportunities down the road for investors who have some cash on hand.

  3. What is even more paradoxical to me is that bond bears are testing the waters in a world of total CB naval supremacy, but junk debt spreads on zombie companies remain absurdly low. Must be something to that. How does one disentangle degrees of nationalization by tranche? Call in the Kremlinologists to decipher the doublespeak of the central planners so we can all be enlightened.

  4. So if you’re attempting to time the market for your bond fund purchases, should you hord some cash now and wait to buy the bonds when yields are close to 2%?

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