Spread Between BBB-Rated Corporate Bond Yield and 90-Day U.S. Treasury Bill Yield The recent increase in the spread between IG credit yield and cash yield marks a significant shift from a 43-year low. Should investors favor U.S. Treasury bills over IG bonds? Image: BofA Global Investment Strategy
U.S. Treasury Bond Future – 10Y Futures Positions Speculators have significantly increased their short positions in U.S. Treasury 10Y futures, reflecting a strong bearish sentiment among traders. Image: Deutsche Bank Asset Allocation
U.S. Long Term Government Bonds (+15y) Rolling 10-Year Annualized Returns Long-dated U.S. Treasury 10-year returns are currently nearing 62-year lows, raising questions about the potential for better returns in the future. Image: BofA Global Investment Strategy
Equities vs. Bonds Recent trends suggest that the risk/reward profile of bonds, particularly U.S. Treasuries, has become more favorable compared to equities. Image: Gavekal, Macrobond
Flows into Equity and Bonds Funds Substantial inflows into equity and bond funds are fueled by investor optimism regarding falling inflation and the potential for interest rate cuts by the Fed. Image: Deutsche Bank Asset Allocation
U.S. CPI Inflation vs. U.S. 10-Year Bond Yield CPI dynamics in early 2024 show a clear pattern: Q1’s higher inflation prompted increased Fed scrutiny, while Q2’s declines suggest potential interest rate cuts, impacting market expectations and U.S. Treasury yields on CPI days. Image: BofA Global Research
High Yield Bond Flows Persistence outflows from high yield bonds could signal a lack of confidence in the underlying companies and their capacity to fulfill debt obligations, making it a crucial indicator to monitor closely. Image: BofA Global Investment Strategy
Rolling 24 Month Correlation Between U.S. Treasury Bonds and Equities Amid high inflation, UST bonds become less effective as a hedge against U.S. stocks, as rising prices erode bond payouts and interest rate hikes lead to a drop in bond prices. Image: BofA Research Investment Committee
ISM Manufacturing PMI and Global Stocks vs. Government Bonds In a potential shift from a “no” to a “hard” landing scenario, government bonds may outperform due to increased risk aversion, interest rate cuts, lower inflation expectations, and their historical performance during economic downturns. Image: BofA Global Investment Strategy
CTAs Exposure to Bonds CTAs’ overall allocation to bonds in the 8th percentile indicates a relatively low exposure to fixed income securities. Image: Deutsche Bank Asset Allocation
U.S. 30-Year Government Bond Returns The 30-year U.S. Treasury bond is currently experiencing a challenging period in terms of its annual return, as it is on track for the 3rd worst annual return since 1919. Image: BofA Global Investment Strategy