When Your Risk-Free Asset Turns On You

When Your Risk-Free Asset Turns On You

Investors were once again "treated" to a rates-inspired tech selloff Tuesday, a fairly regular occurrence. The amount of duration embedded in the market is enormous, but because "everyday" investors don't generally understand the concept, sharp pullbacks in secular growth darlings (e.g., mega-cap tech) seem to come out of nowhere, leaving some (too many) folks perplexed. To reiterate: These moves and the accompanying factor volatility are almost completely explainable by reference to what's ha
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3 thoughts on “When Your Risk-Free Asset Turns On You

  1. Convexity trading probably is part of the UST bond sell off. It appears that the problem in rates is emanating out of Europe and Japan to a large extent as they are funding currencies. Bunds and Gilts in particular are leading the charge up….It is curious to see commodity prices, especially oil and gas launch higher in the face of a stronger US$. One of those markets has to give. Often FX is a leading indicator- do not be surprised if commodity prices roll over fairly soon.

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