A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Equity markets opened lower Thursday as global bond yields surged higher. Mehul Daya, an analyst from South Africa-based Nedbank, believes bond yields are approaching the “Rubicon level,”
“The JPM Global Bond yield, after being in a tight channel, has now begun to accelerate higher. There is scope for the JPM Global Bond yield to rise another 20- 30bps, close to 2.70%, which is the ‘Rubicon level’ for global financial markets, in our view. If the JPM Global Bond yield rises above 2.70%, the cost of global capital would rise further, unleashing another risk-off phase. Our view is that 2.70% will hold, for the time being. We believe the global bond yield will eventually break above 2.70%, amid the contraction in Global $-Liquidity”
“@SBarlow_ROB Nedbank: "JPM Global Bond yield to rise another 20- 30bps, close to 2.70%, which is the ‘Rubicon level’ for global financial markets"” – (research excerpt) Twitter
“@SBarlow_ROB BMO: "Yields Break on Through, to the Other Side "” – (research excerpt) Twitter
“Global stocks under pressure as U.S. Treasury yields soar” – BNN Bloomberg
“A selloff in bonds has spread into Asia and Europe, triggering widespread falls in stocks” – Bloomberg
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CBC’s headline of “Booming global economy at risk of going bust as debt soars, IMF warns” is a bit alarmist for my taste,
“[The IMF report] highlights several areas of concern, including the growth of digital currencies, the rise of unregulated "shadow" lenders in places like China and India, and "regulatory fatigue" when it comes to cracking down on insurance companies and investment firms. The IMF's biggest worry is the increasing indebtedness of governments, especially in the developing world, putting their economies at risk as interest rates begin to rise. The median government debt-GDP ratio now stands at 52 per cent, up from the pre-2008 crisis mark of 36 per cent, and a decade of global efforts to keep the economy afloat has left central banks more vulnerable than before.”
“Booming global economy at risk of going bust as debt soars, IMF warns” – CBC
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John Authers has been among the most prominent voices at the Financial Times for decades. His farewell essay, ahead of a move to Bloomberg, is well worth reading for those who can gain access,
“The idea of news organisations with long-standing cultures and staffed by trained professionals deciding what is best to publish appears bankrupt. We are not trusted to do this, and not just because of politicians crying “fake news” … Trust [in the finance industry] then died with the credit crisis of 2008 and its aftermath. The sheer injustice of the ensuing government cuts and mass layoffs, which deepened inequality and left many behind while leaving perpetrators unpunished, ensured this… On one thing, I remain gloomily clear. Without trust in financial institutions themselves, or those who work in them, or the media who cover them, the next crisis could be far more deadly than the last.”
“Finance, the media and a catastrophic breakdown in trust” – Financial Times (paywall)
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Tweet of the day:
Diversion: “Amazon’s Jeff Bezos on why Blue Origin is his ‘most important work’” – CNBC
Tuesday newsletter: “How investors will know when the market rally’s over” - Globe Investor
Scott Barlow