Thursday, 11 October 2018

There's a bond market sell-off?!

Well, that's what they say, dear reader(s). I mean, how would I know? Oh, uh ... this PR email stresses that this isn't advice to buy or sell, etc. Blah, blah, blah. You know how it is. 'Yes.' And no endorsements from me, obviously. 'Ha!' I'm just a freakin' shaman, on the mystical side of finance, you dig? / Right -

David Absolon, Investment Director at Heartwood Investment Management, the asset management arm of Handelsbanken in the UK, states: "A bond market sell-off has driven US Treasury yields to multi-year highs, fuelled by fears of rising interest rates amid stronger-than-expected US economic data. The situation has been further exacerbated by a rapidly expanding US budget deficit, funded through additional Treasury issuance and pushing yields higher (particularly on shorter-dated bonds). The current sell-off may even have been significant enough to break US 30-year Treasury yields out of a long-run trading range - previously apparently a well-entrenched downward trend. 30-year Treasury yields reached almost 3.4% on Friday."

Okay, uh ...

"Sharp rises in yields can cause market dislocations, and if the current bond market sell-off becomes more aggressive, it could begin to create genuine problems for equity markets. This is because, first, investors would be less willing to take on equity risk if they could receive a similar return on US government debt whilst taking zero risk, and second because a rise in the long-term cost of money would lower equity valuations today (under discounted future cashflow modelling)."

Oh, right.

"If yields in the US continue to rise significantly, this could also begin to impact the wider economy through higher debt refinancing costs, as well as impacting the housing market (banks charge higher interest rates for mortgages when Treasury yields rise)."


"For now, though, higher yields are a sign of economic strength in the US and should therefore be viewed in a positive light. We are positioned for rising yields so are comfortable with developments but, as ever, we will be listening closely should the mood music change."

Okay. Thanks, Dave!


Anything else? Music? I've finished my new song, man. 'Yippee!' Yeah. I haven't played it the whole way through yet, so ... I hope there aren't any problems. I just finished the last bit of lyric yesterday, and then left it. I'll start to rehearse it tonight. / It's my fourth "world-beater", as I like to call them. I'll have to leave one off the demo now. I don't know which one, but it's a nice problem to have, ain't it?

What else? Guitar? Well, pop fan(s), my guitar playing moved up a level this week. It's a peculiar thing that happens overnight every six months or so. I remember in 2014, I played my guitar over twenty hours a week for seventeen weeks, and ... I made absolutely no progress whatsoever. However, guitar skill seems to build up in your fingers and brain and then suddenly bursts like a dam one day. It's just one of the mysteries of the guitar, man. / The piano is a piece of piss in comparison. When I was at school, my music teacher said I made four years progress in six months. And I was only practicing four or five hours a week! Maybe I had a special talent for the piano. I don't know. It doesn't matter. It's all bridge over troubled water now, you dig?

Oh, there'll be a conceptual later, and then ... the weekend!

Bye! 'Laters!' Yeah, Voice says laters. Bye!