Bond yields are rising, should I be worried?
Hi guys Bond yields keep rising . Should I be concerned? Or do you think they are at a peak? Thanks Andrew
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Answer
Hi Andrew,
Rising bond yields is rarely a good thing for assets but we believe equities are already pricing in interest rates being “higher for longer” – it shouldn’t come as a surprise, RBA Governor Michele Bullock has warned us for many months that interest rates aren’t coming down any time soon. Our take is as follows:
- In August/September we said credit markets were pricing in a “as good as it gets” scenario toward interest rate cuts.
- Now after bonds have retraced all of their 2024 gains we believe this position has reversed.
We like the “rate-sensitive” stocks with bonds around current levels but of course we must always be flexible to change. In short, we think yields are at or close to a peak.
