Gelangen wir zurück zu einem Bond-Markt in dem wieder Angebot & Nachfrage die Rendite bestimmen? Kurzer Artikel des erfolgreichen Portfolio Managers in Englisch.
This summer, it seemed many and prominent short-term oriented market participants were speculating on rising interest rates and maybe even some short-term Fed action in their favour. Short-term interest rates increased, the Federal Reserve did not act. Yes, they announced the beginning of a tapering mode but no increase in interest rates. Maybe we should one day go back to look at the Fed's mandate. I sometimes do get the impression market participants get carried away while performing their daily tasks and forget what the Fed's role really is.
My Inflation Picture
Anyway, as was the case at the beginning of October, excessive interest rate speculation seemed somewhat exaggerated. However, interest rates had and still have not yet shifted dramatically towards inflation at the long end. Thus, my picture on inflation is/was (my vision seems somewhat blurred at this moment) still showing a one-off increase in prices for daily goods, salaries, etc. Maybe I will have to adjust my inflation picture over the weeks to come. But, so far, I am still not entirely convinced we will see lasting inflationary pressure. So, let us see, I am definitively more cautious than I was some months ago.
This week, market participants reacted to the just-published U.S. October inflation numbers with an upward adjustment of the key interest rate path. Up to now, three rate hikes are priced in for the Fed meetings between June 2022 until February 2023.
A different perspective
Nevertheless, in my opinion, so far, the long end bond yields show and showed us either that market participants do not yet quite believe in a sustained rise in inflation or that they show confidence in the actions of central banks, which at this stage would surprise, if not irritate, me somewhat.
What happened during summer until October?
However, as it happens, I just read a piece of market research giving a slightly different perspective on what happened in the bond market between summer and October. The writer suggested that indeed many and prominent short-term oriented market participants were betting on rising interest rates. This is no surprise, but now it comes. At the same time, considerable and traditionally long-term oriented bondholders began unwinding some of their positions in the market, which apparently brings their holdings to the lowest in years if not decades.
If large and traditionally long-term oriented bondholders are selling instead of buying fixed income products and around the same time the Federal Reserve starts tapering its bond purchasing program, where will all the bonds issued daily go? If we go back to an unmanipulated bond market where offer and demand set the price, in my opinion, there can only be one direction for bond yields; they would most probably have to go up, no?
...and yes, this would impact my personal inflation picture, depending on the actual increase, maybe more, maybe less.
Quelle: Incrementum AG