Government entities, Pharma and Health Care providers all cite a 2-week timeline to analyze the new variant. Friday’s outsized move was helped by thin holiday liquidity and today’s buy-the-dip reaction is fairly typical.
The same positioning indicators have Energy as the most crowded sector short, with long positioning down ~90% over the last decade.
The sector with the least crowded positioning at the moment also happens to be a good inflation hedge. Underinvestment in the Energy sector is the understatement of a lifetime.
Higher real yields (nominal yields – inflation expectations) follow recent attention on easing supply bottleneck pressures on rising Asia vaccination rates and efforts to dwell times at LA/Long Beach ports.
The NASDAQ 100 (NDX) has led all other major indices this week as 10-year real yields have remained anchored (now -1.15) near all-time lows at -1.19.
The S&P 500 (SPX) should be upwardly biased into year-end as hedge fund managers avoid negative P&L on shorts.
The Hang Seng Index (HSI) has spent the last two months building a base and now reversing from short-term oversold levels. The Hang Seng tends to lead mainland China markets by several days/weeks
We expect nominal bond yields to continue moving higher from here as long-end yields currently imply near zero GDP growth in 2022.
Key support of the 5/30 yield curve sits in the 75-79bps range. We expect the 5/30 curve to hold above those levels given the fundamental outlook and recent yield deceleration at the front end of the curve.
Key support of the 5/30 yield curve sits in the 75-79bps range. We expect the 5/30 curve to hold above those levels given the fundamental outlook and recent yield deceleration at the front end of the curve.
