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Treasury Market Flashes New Warning As Real Yields Go Negative (The Capital Spectator, 4 min read) From inverted (nominal) yield curves last year to sub-zero real yields in 2020, the US bond market is again signalling looming economic weakness. But the debate over the current power of these signals continues, especially for the less liquid TIPS market.
Why Bonds Are Still a Good Hedge (Blackrock, 2 min read) Despite UST yields below 1.6% bonds remains a good insurance against equity risk. The correlation remains negative and during any pronounced spike in volatility long duration bonds significantly outperform.
Central Bank Dovishness and Good Fundamentals Create Opportunity in Spread Sectors in 2020 (Advisor Perspectives, 3 min read) Both spread products and emerging markets should outperform government bonds this year with the Fed keeping rates firmly on hold and the global economy picking up pace.
How a Stock Bubble Could Unwind America’s National Security (Defense One, 8 min read) The eventual reversal of Tesla’s meteoric stock price rise will bring many other stocks crashing down with it and leaves the potential for higher interest rates (and government financing costs), a weaker dollar and stepped up deglobalisation.