The Context
We are coming off a curious week in which more of the same was accompanied by developments that, not so long ago, were considered unlikely, if not unthinkable.
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We continued to see new record highs for US equity indices, driven almost exclusively by narrow momentum in the technology sector. Conversely, we also saw new multidecade-high government bond yields in a growing number of advanced economies. Meanwhile, with the continued stalemate between the US and Iran, oil prices remained elevated (with Brent above $100 a barrel). On the economic front, t…
The Context
The transition from September to October brought a brief respite for weary fixed-income investors – even as tech stocks pushed the NASDAQ to a new record high. That said, the structural repricing of sovereign risk began to have a greater impact on vulnerable credits, whether high-yield corporates or more rate-sensitive G7 economies such as France.
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Looking back at the past week, the defining feature of the financial landscape was the continued volatility across government bond markets. We saw sovereign yields reach multi-decade highs across a swathe…